Is it possible to include text over an image from i-photo?

I wish to overlay one of my images with a caption but have no idea of what I would initially have to do with the original image to get to the stage of including text/wordart etc. Can anyone help?

You'll need an external editor for work like that.
In order of price here are some suggestions:
Seashore (free)
The Gimp (free)
Graphic Coverter ($45 approx)
Acorn ($50 approx)
Pixelmator ($50 approx)
Photoshop Elements ($75 approx)
There are many, many other options. Search on MacUpdate. You can set Photoshop (or any image editor) as an external editor in iPhoto. (Preferences -> General -> Edit Photo: Choose from the Drop Down Menu.) This way, when you double click a pic to edit in iPhoto it will open automatically in Photoshop or your Image Editor, and when you save it it's sent back to iPhoto automatically. This is the only way that edits made in another application will be displayed in iPhoto.

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