Think Twice Before You Add Pictures to Your Blogger Blog Posts
Especially, if you are new to blogging and using Blogger as your blogging medium then you should be aware of this limit in Blogger blog. You can only upload up to 1 GB of photos in total for your blog. Blogger uses the Picasa Web Album to store the photos that you upload for your blog posts. The maximum size limit is 1GB for free account. So if you post high-resolution photos from the beginning indiscriminately for your blogspot blog posts, you will run out of space in the long run. Then you have to buy extra space to accomodate your new pictures or you have to delete pictures from your old blog posts.
So obviously you will try to make your blog look good and attractive by showing pictures. But if you intend to use the blogspot blog for long time & don’t intend to pay at all, use your space cautiously.
1 GB is quite a large space at least for pictures 
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You can use free image hosting services like http://imageshack.us/ .. I guess ?
I would recommend a registering for a free picture hosting account.
How do I know when I have run out of space, can I see that somewhere?
@Ellie Knol
You will find “Tools and Resources” at the bottom of your Blogger dashboard. There you can find the Picasa album link that is tied up with your account. Click on it and at the bottom of your Picasa page you can check how much storage you have already used.