To update an item image, go to the item master in the xTuple ERP database. Once there, navigate to the documents tab and DETACH the old image you no longer wish to use. Then, this is very important, SAVE. This will close the item window. Next, reopen the item window and ATTACH the new image. That should do it.
Note: If you do not save the item after detaching, the xTupleCommerce site will not recognize that there was a change and, therefore, the image will not show up properly.