Ubuntu 11.10 uses lightdm as its display manager, configuring how the login screen behaves and what it looks like can be done with the files in /etc/lightdm. To change the background image for the login screen simply edit /etc/lightdm/unity-greeter.conf (as super user, so be sure to use sudo or gksudo to fire up your editor) and change the background property to point the file that you want to use as your background image. You can also remove the Ubuntu logo by setting logo property to nothing (logo=), changing the path to another picture will (as you might expect) show that picture instead of the Ubuntu logo.

To see the result you’ll have to restart lightdm or by logging out. Restarting lightdm means restarting your entire X windows environment (which more or less has the same effect as logging out). To restart lightdm open a terminal and type “sudo restart lightdm”.

If you want to toy with your lightdm configuration and are comfortable on the terminal you can use another screen by hitting CTRL+ALT+F1 (through F6) to access a separate terminal session that isn’t running in X windows. You can go back to your X session with CTRL+ALT+F7 (restarting lightdm will force you back to it immediately).

I found that not all settings in the configuration files had impact on the actual result (per example I was unable to hide users in the login screen with /etc/lightdm/users.conf). Also I could not find a way to remove the grid of dots that overlays the image in the login screen (comments I found online suggest its hard coded into lightdm or unity-greeter).

As a final note: If you want to disable guest users from logging in from the login screen you can set the  allow-guest property to false in /etc/lightdm/lightdm.conf