I have no issues with inserting images, and I do it all the time, but I usually have them on their own line. Whenever I try to insert them along with the text, so that the text will wrap around them, the text ends up way too close to the image, and it looks stupid. I've tried adding hspace, but all it does is slide the image over from the left of the post area, as opposed to creating a larger gap between it and the text.
I've seen it done properly on many WP blogs, so why can't I get it to work? BTW, the same issue has been with me through 2 years of different themes, so it has nothing to do with my current theme.