Currently, if the page background of a page style is defined to show an image, the image will just appear inside the page margins. So, if the user wants to add a image as background that should cover the complete page size (paper size), he/she will either have to adjust the page margins, or add the image somewhere in the content area (maybe header/footer), setting it to "entire page" and in background.
I think it's hard to understand that you can set a picture as background for a paragraph with "Entire Page" setting, but not for the page itself.
See also this question on askLibreOffice: http://ask.libreoffice.org/question/4683/full-a4-background-image-in-writer/
*** This bug has been marked as a duplicate of bug 33041 ***