Donkey_Kong's method is what most of us should be using. While it's cool and probably easier to link to an outside service like photobucket, that really sucks ass in the long run. If you delete the images, if the service dies, or you just move on, those photos disappear and six months, twelve months, even three years later someone is going to do a search, find your post, and go, "What the ---fudgesicle---? Stupid ---uvula--- linked to pictures that don't even exist! What good is this thread?"
I can't tell you how often I was trying to find information on something and there's a cross link or image leading to a dead site that relates to some crucial understanding within that thread. It's like seeing a damn teaser to the movie of the millennium, but every single copy of the movie was destroyed in some apocalyptic event just before wide release.
I'm not sure if Saint put it so succinctly, but I believe he cares less about bandwidth than he does about preservation of the information here.