Uploading Images

I’m pretty new to WP. I have set the options to allow uploading of images. However, when I’m writing an entry, I see no option for this.
Right now, it’s a big pain – I have to upload the image via FTP, then figure out the http: location on my server, then enter the path into my entry. This makes for very slow entries when needing to upload an image.
Can someone point me in the right direction as to why I seem incapable of uploading images? Thanks.