From Stuart Sutcliffe's page on Wikipedia:

In July 1960, the British Sunday newspaper The People ran an article entitled, "The Beatnik Horror, for though they don't know it they are on the road to Hell", which featured a photograph taken in the flat below Sutcliffe's, with a teenaged Lennon lying on the floor. Allan Williams had set up the photograph.

Anyone have the picture?

Don't have the picture, but here's the story behind it. From The Guardian.

There weren't too many beatniks in Liverpool in 1960, which made the arrival of Royston Ellis something of an event. Ellis, author of two volumes of poetry, Record Mirror's teenage pop pundit and self-styled "King of the Beatniks", was in the city to read poetry at the Jacaranda coffee bar. There he met Stuart Sutcliffe, a member of the local band then known as the Silver Beetles, whom he convinced to back him for the reading. Ellis subsequently stayed for a week at the Gambier Terrace flat where Sutcliffe shared a room with John Lennon, introduced the pair to Benzedrine from a Vicks inhaler, and told them all about the London demi-monde of "drugs and queers and the bohemian lifestyle".

Ellis was a brief but important figure in the story of the Beatles. He straddled pop and literature, unprecedented at the time, and recognised the artistic potential in rock'n'roll, which was then generally seen as nothing more than teenage entertainment. He was also a canny self-publicist - playing the beatnik card to the full, he took out insurance on his beard. "They looked up to him," says Steve Turner, whose book The Gospel According to the Beatles charts the spiritual growth of the band and the influence it had. "He was published, he knew Cliff Richard, and he was a part of this world they knew nothing about. It was Royston who convinced John to leave art school and follow his dream."

Ellis also claims to have convinced the band to change their name. "I said that because I was a beat poet and they were going to back me, and also because they played beat music, why didn't they call themselves the Beatles?" Two months after Ellis's visit, the flat was subject to an exposé on "the Beatnik Horror" by the People newspaper (the horror didn't extend much further than a sinkful of washing up and jazz on the record player), but by then the Beatles were playing nightly to prostitutes and transvestites in Hamburg's red light district.

In 1963, Ellis left England for Central America before moving to Sri Lanka, where he still lives and works as a novelist and travel writer. Ellis missed out on the counter-cultural explosion the Beatles led, but a few months before he left he got together with them once more, after a concert in the Channel Islands. There he and Lennon ended up sharing a bed with a girl called Pam, who had a fondness for polythene. The Beatles' Polythene Pam was the creative fruit of this brief, bohemian union, and Ellis's part in the Beatles' legacy was secured.

It seems that it's not here  :
http://beatlesource.com/savage/main.html

Time for idle gossip and baseless speculation.
Many sites appear to be under the impression that Mr Royston is gay. Yet the Guardian (amongst others) claim that it was Royston's girlfriend Stephanie (the inspiration for Polythene Pam) whom John and Ellis climbed into bed with together many years ago. And that John's lines about her looking like a man and being in drag were just poetic license.
Somethings got to give. Naughty naughty John.

Quoted from raxo

It seems that it's not here  :
http://beatlesource.com/savage/main.html

I can mention a million sites that don't have the picture, Raxo. What we are looking for is a site that does have it.

Are we? I was just answering a PM ...

Quoted from raxo

Are we? I was just answering a PM ...

then answer it in the pm area retread..

John Lennon's quote on the "Polythene Pam" incident:

"Polythene Pam: That was me, remembering a little event I had with a woman in Jersey, an island off the French coast. A poet, England's answer to Allen Ginsberg, a beatnik that looked like a beatnik who was from Liverpool, took me to this apartment of his in Jersey. This was so long ago. This is all triggering these amazing memories. So this poet took me to his place and asked me if I wanted to meet this girl, Polythene Pam, who dressed up in polythene. Which she did. In polythene bags. She didn't wear jack boots and kilts - I just sort of elaborated - and no, she didn't really look like a man. There was nothing much to it. It was kind of perverted sex in a polythene bag. But it provided something to write a song about".

Apparently her real name was Stephanie, not Pam.

Quoted from The End

John Lennon's quote on the "Polythene Pam" incident:

"Polythene Pam: That was me, remembering a little event I had with a woman in Jersey, an island off the French coast. A poet, England's answer to Allen Ginsberg, a beatnik that looked like a beatnik who was from Liverpool, took me to this apartment of his in Jersey. This was so long ago. This is all triggering these amazing memories. So this poet took me to his place and asked me if I wanted to meet this girl, Polythene Pam, who dressed up in polythene. Which she did. In polythene bags. She didn't wear jack boots and kilts - I just sort of elaborated - and no, she didn't really look like a man. There was nothing much to it. It was kind of perverted sex in a polythene bag. But it provided something to write a song about".

Apparently her real name was Stephanie, not Pam.

So it could have been - Styrofoam Steph!

My story is so much more fun. Poor gay Mr ellis must have felt a bit left out with all this man-on-woman action.