When you open an email, there is a little grayed out option on the upper right portion of the screen that says "Show pictures". Tap that.
If you want the pictures to download automatically, there is an option under settings/applications/Email to "ask to show pictures", but once that is selected, there appears to be no way to have the pictures automatically download.
If you want attachments to automatically download, go into settings. account settings, then tap on your email account, then "account settings: on the right side of the page, and check the "Download attachments option.