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The blog package I'm using here came with 1000MB of storage space which can be used to upload documents of all kinds. The most memory intensive files tend to be photographs and therefore you really need to you use your storage well. Depending on the number of megapixels on your camera and the settings you use, a single high resolution photograph can often be many megabites in size.
You can upload the original photo into your blog's media store and then use the resize function to reduce the picture width to an acceptable size for your page. I find this often leaves the image slightly fuzzy but more importantly the original photo is still eating up your memory allowance.
By far the best option where possible is to resize your image in a photo editing package before upolading it to your blog. I use Photoshop but virtually all digital cameras come with some form of editing software which will allow you to reduce the size of your image without losing the quality of your picture.
Ian Jackson talked about the template he uses for the artinliverpool blog and the fact that he has two side columns around a central double sized column he uses for his posts. This blog is slightly different in that it has been set up with one side column on the right and therefore, a larger posting area.
Through trial and error on our blog eventualities which uses the same template I worked out the optimum width for a single image would be 500 pixels. I often use two pictures side by side and for your guidance the ratios for a portrait shot are therefore 180 pixels wide by 240 pixels high, and a landscape shot is 320 pixels wide by 240 pixels high. Or you could use two portrait or landscape photos each resized to 250 pixels in width.
At standard screen resolution of 72dpi a colour photo resized to the pixel ratios above will still be sharp and clear but will only create a file size of about 100k or less, substantially less than your original.