Images in Posts??

Go to your post screen, click on Advanced, on the next screen is the option to Upload an image.
If that option is not there, check you have enabled it in Options > File Uploads.

I think what Tom’s asking for is an easier way to do it. For example, instead of (or as well as) the IMG quicktag, you could have a quicktag which, when you click on it, gives you the file upload dialog box, uploads the specified file to the uploads area, and automatically inserts a link to the file into the post. That way, it’s all done in one go, without having to remember to upload the picture before you start writing the post, or remembering what the file’s called.
It would be a rather nice hack/plugin if someone were to write it…