I use Flickr as an image-hosting service. It is easy to use - you just upload your photos, then you can blog right from their site or copy and paste url's they assign to your photos.
They give you a choice of sizes to use, too.
I just discovered a new feature - you can create a "badge" - a strip of photos that you have uploaded to use on your blog. The badge links back to your flickr account so people can view all your photos even if you have never blogged them.
I just made a badge for Snackish but I am on a rather terrible iMac with system 9 (don't ask) at work, and I don't know how it will look when I get home. Your mileage may vary.