k. lets go over some basics.
the negative battery terminal is what is used in almost all circuits as the ground. anything that needs a 0V reference or anything like that goes to ground, and ground is considered to be 0V (since voltage is all realative, we could techincally choose positive to be 0V and negative to be -7.2V (or whatever) , but this is just not how its done).
so in this way, you get the proper voltage off of the positive end of your battery pack relative to ground.
capcitors consist of two parallel electric plates that are close together, but not touching (in the round caps they are usually rolled up like a carpet). basicaly when you put a potential across them, what hapens is that the negative plate fills up with electrons, and the positive plate fills up with 'holes' (the opposite of electrons). now remember that electrons and holes attract each other strongly. so you get this dense concentration of both of them on either plate. capcitors are a way of storing energy. electrons cannot flow
through a capacitor
so hopefully you can now understand why the capacitors in that picture are oriented the way they are. they store up some extra energy, just in case the circutry needs it, in which case they can provide it. they help 'smooth' out the voltage lines and stuff. they are connected directly from the positive terminal of the power source to the negative terminal, such that they operate at the same potential as the battery. they do not short it out since electrons cannot flow through a capacitor
the picture is labelled correctly. thats the way the battery goes (you seem to have some confusion about negative and positive on things. yes, with batteries you connect positive to negative when you are putting them in series. but you arent putting the caps in series, you are putting them in paralell. this is in fact the same way you would connect a battery in paralell), thats where the 'I"(nput) and "O"(utput) pins are connected to, and thats how the caps go.