All your library information and the photos, are stored by iPhoto in a separate library folder. When photos are imported, they get copied into the library folder, where thay are managed and organized in a proper manner.
You can just use iPhoto’s interface to manage your photos, and you don’t even need to look inside the iPhoto library folder itself. However, in some cases, especially if you encounter problems with your iPhoto library, it can be useful to know a little bit more about what goes on inside the library folder.
There are sometimes when your iPhoto can, for some reason or another, become corrupt and unable to use. Various symptoms including, your photos not showing up properly (e.g. showing up as gray or black squares), the library becoming unusually slow, or iPhoto crashing as soon as you try to open your library. iPhoto library does provide certain built-in rebuild functions to restore iPhoto library, but you require a professional data recovery software to restore iPhoto library to the fullest.
REMO Recover (Mac) Media Edition software lets you restore iPhoto library with ease. The software lets you recover photos of all well known formats, from both HFS and HFS+ volumes.