To begin cropping an image in iPhoto, click with your pointer on an area of the image then drag to enclose the area you wish to keep and click on the Crop button or press Return on your keyboard.
You can also choose preset image dimensions from the Constrain pulldown menu next to the Crop button.
When you make your selection from the menu, a selection will appear on your image with the dimensions you select. You can press Return on your keyboard to crop the image, or you can change the dimensions of the bounding box by placing your pointer in one of its boundaries until it changes to a line with outward facing arrows on each side of it. You can also drag the bounding box by placing your pointer anywhere inside of it until it changes to a hand. You can then drag the bounding box to a different part of the image.
To rotate an image, you just have to click on the Rotate button in the Edit toolbar.
By default, images are rotated counter-clockwise when you click on this button. To rotate an image in the opposite direction, hold down the Option key on your keyboard before you click on the button.