I am right on the line for Giants recommendation between small & medium frame at 5' 7". I got the small after riding it around the lot for a while. The LBS said I could fit either. Basically it was down to my preference. It felt & still feels good based on my limited knowledge of how I'm actually supposed to feel on a MTB. I have no real complaints except a little numbness in the hands while riding. This was my first ever new MTB bike purchase so I was kind of flying blind. Based on the pic do you think the bike is sized right for me?
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If you're on the borderline of two different sizes you can go with either one but be prepared to swap out a few parts (i.e. stem, bars, seatpost) to get that perfect fit with either one.

tough to say, but to me it looks small. 

personally, id rather be on the larger frame with shorter stem/wider bars. 

it really doesn't matter what a bunch of us think though, if you are comfortable that is all that matters, ride it and enjoy! as long as your saddle height/position is right, it will be just fine.

try and find a demo day or something and try a larger frame. it will feel weird at first, but you may not feel as cramped.

I like a large frame myself. I must be on the border between a medium and a large. I have a Spec. medium bike and it's okay. My Marin is a large and it fits me better. My Kona DH bike is a large also.

I'm on the border of L and XL but prefer the roomier cockpit of an XL. But it's not just about height - two riders of the same height may "fit"  two different size frames depending on their builds. I have a longer torso and feel cramped on the large. If my height was in my legs instead, a large would probably feel better. 

It also comes down to the manufacturer- to me Specialized runs a bit small, but if I was on, say, an Orbea Occam, I'd be on a large.

And, as others have pointed out, feel free to swap out parts to fine tune either way. As for the photo, though, seems like your bike fits fine.

If you are between sizes it is wise to consider a few things: 

1. What is your inseam?  If you are 5'7'' but have the inseam of someone closer to 5'9'' then you should consider the larger of the two sizes.  Why, you ask?  Because of bar to saddle drop.  A smaller bike will have a shorter head tube and will be lower in relationship to the saddle.  Most sizes vary about 10-15mm per size on their head tube lengths.  Now this is fine if you like to be in a lower/more aggressive riding position.  But if you want to be more upright/relaxed then the bigger size is a better recommendation.  Also you will have more seat post exposed which can, in some cases, cause more stress on the seat tube of the frame because of the added leverage of a longer seat post.  I had a customer in the past that was 6' tall that insisted on riding a medium EMD-9.  He ended up cracking 2-3 frames at the seat tube/seat stay junction.

2. Other things to consider would be top tube length.  Yes you can put a longer stem or slide the saddle back/use a setback seat post to make a smaller frame fit "bigger" but you can run into problems.  If the saddle is too far back to make the cockpit longer you can end of being too far back which can do a couple of bad things. 1.  Put your knee behind the pedal spindle which isn't good on your knees and shift your weight too far rearward which can make the bike wander/make the front end too light when climbing.  The other problem is if you go the longer stem route then you can make the steering pretty wonky with the bars too far forward.

In the end you need to ride what is comfortable and safe.  An ill fitting bike not only is a bummer to ride and wrecks your experience but can put added stress on parts of your body that as you get older, get less friendly to being abused.