I am trying to create a nice video of my famlies first geocaching experience. I create a project DV/DVD 720x480 because my gootage was captured while geocaching with my iPhone4. Mediainfo informs me its
Width : 640 pixels
Height : 480 pixels
Display aspect ratio : 4/3

I create a photo in Gimp which is 720x480 BUT when I insert said photo there is black space above and below the photo. What do I not understand about the project settings? Is there some setting defining the monitor size? Here's a photo of my kdenlive project and what I am seeing. Any help or explaination would be much appreciated.

https://lh4.googleusercontent.com/-_ZxMwuD0I_s/TuH_Le_xnJI/AAAAAAAABbs/mPQJq6gSfB4/s720/Screenshot-3.png

I don't get why a photo that's 720x480 inserted into the timeline where the project settings are 720x480 would have the black above and below it?

I can understand that happening when I insert a video clip (iphone ones) that are 640x480, won't I have spaces on the left and right since the width is different?

Pixel aspect ratio. DV / DVD are non square pixels as shown in your screen grab. Your Gimp image probably is square pixels 1:1 and your iPhone source of 640x480 will be 1:1 PAR.

You could try this calculator: http://www.digitalrebellion.com/webapps/pixel_calc.html