[macosxnerd101]

A few things. First, you have a rogue semi-colon instead of a brace at the end of your try-block.

try { 
     file = fileChooser.getSelectedFile(); 
     image = ImageIO.read(file); 
     ; //this should be an end brace 

Next, there are a few things with these two lines. First, you import everything from the java.awt package, including java.awt.Frame. You also name your class Frame. I would avoid doing this, as the naming is misleading. I would instead name your class something like MyFrame. Also, why do you subclass JFrame if you want to create a JFrame instance variable in your class? The whole point of subclassing JFrame is so that you can treat the class as a JFrame.

public class Frame extends JFrame implements ActionListener { 
 
        JFrame frame = new JFrame("Graphics"); 

As for displaying your image in the JFrame, you need to override the paint() method JFrame inherits from JComponent. It has a Graphics param which you can use to do your painting, like so:

public void paint(Graphics g){
   super.paint(g);
   //use the Graphics drawImage() method to paint the Image
   //to the JFrame
}

For more information on the Graphics class, check out the API:
http://java.sun.com/...t/Graphics.html

[Dogstopper]

You need to override a JPanel and use it to paint (JFrame can do it, just a little complex. I used an internal class. See?

import javax.imageio.ImageIO;
import javax.swing.*;
import javax.swing.filechooser.FileNameExtensionFilter;
import java.awt.Graphics;
import java.awt.event.*;
import java.awt.image.BufferedImage;
import java.io.*;



public class MyFrame extends JFrame implements ActionListener {

        JMenuBar mb = new JMenuBar();
        JFileChooser fileChooser = new JFileChooser();
        File file;
        BufferedImage image = null;
        int height ,width;
        
        PicPanel pan = new PicPanel();

        
        public MyFrame()
        {
                fileChooserSettings();          //applies various fileChooser settings
                addFileMenu();                          //Adding the fileMenu
                frameSettings();                        //applies various frame settings
                
        }
        
        public void actionPerformed(ActionEvent e) {
                if(e.getActionCommand().equals("Open image"))
                {
                        int ret = fileChooser.showDialog(null, "Open image");
                        if(ret == JFileChooser.APPROVE_OPTION)
                        {
                                loadImage();    
                        }       
                }
                if(e.getActionCommand().equals("Close image"))
                {
                        JOptionPane.showMessageDialog(null, "This button isn't doing anything right now :D/>", "Error", JOptionPane.ERROR_MESSAGE);
                }
                if(e.getActionCommand().equals("Exit"))
                {
                        System.exit(0);
                }
                
        }
        public void loadImage() 
        {
                try
                {
                       pan.setPic();
                       pan.repaint();
                        
                }catch (Exception e1) {
                        JOptionPane.showMessageDialog(null, "Please open an image file", "Error", JOptionPane.ERROR_MESSAGE);
                }
        }
        
        private class PicPanel extends JPanel {
        	BufferedImage img = null;
        	
        	public void setPic() {
        		try {
					img = ImageIO.read(fileChooser.getSelectedFile());
				} catch (IOException e) {
					// TODO Auto-generated catch block
					e.printStackTrace();
				}
        	}
        	
        	public void paint(Graphics g) {
        		super.paint(g);
        		if (img != null)
        			g.drawImage(img, 0, 0, null);
        	}
        }
        
        
        private void addFileMenu()
        {
                //fileMenu
                JMenu fileMenu = new JMenu("File");
                mb.add(fileMenu);
                
                //JMenuItems
                JMenuItem open = new JMenuItem("Open image");
                JMenuItem close = new JMenuItem("Close image");
                JMenuItem exit = new JMenuItem("Exit");
                
                //Adding items to fileMenu
                fileMenu.add(open);
                fileMenu.add(close);
                fileMenu.add(exit);
                
                //Adding actionlisteners
                open.addActionListener(this);
                close.addActionListener(this);
                exit.addActionListener(this);
        }
        
        private void fileChooserSettings()
        {
                FileNameExtensionFilter filter = new FileNameExtensionFilter("Image files", "jpg", "gif", "jpeg", "psd");
                fileChooser.setFileFilter(filter);
        }
        
        private void frameSettings()
        {
                getContentPane();
                setTitle("Graphics");
                setSize(1000, 1000);
                setResizable(false);
                setJMenuBar(mb);
                add(pan);
                setDefaultCloseOperation(JFrame.EXIT_ON_CLOSE);
                setVisible(true);
                
        }
        
        public static void main(String [] args) {
        	new MyFrame();
        }
        
        
}

You might want to tidy it up as I was in a hurry to finish it.

[Dogstopper]

You simply forgot to add the picture panel to the frame!

private void frameSettings()
        {
                getContentPane();
                setTitle("Graphics");
                setSize(1000, 1000);
                setResizable(false);
                setJMenuBar(mb);
                add(pan); // Add the picture panel!
                setDefaultCloseOperation(JFrame.EXIT_ON_CLOSE);
                setVisible(true);
                
        }