Instead of uploading your images to WordPress, you can utilize other services like Flickr or Picasa to easily embed your images without worrying about quota. This post explains the process of how to do that using Flickr.
Now go back to Wordpress to insert the image into your post. Click at the start of a paragraph you would like to have aligned to the image. Click the "Add Media" button just above your editing window. Click the "Insert from URL" tab to get the options for inserting an image by URL.
- Image URL: Paste the URL you copied in Step 2.
- Image Title/Caption: Enter a title for the image. Alt Text: Descriptive text for the image, useful for people who are visually impaired
- Align: None will have no text to left or right, useful for large images. Left puts image to the left and wraps the text around it. Right does the same but with the image on the right.
- Link To: Flickr likes it best if you include a link to the Flickr image's main page. Put that URL here.
Once you've completed the form, click "Insert into Post" and you're all done. You can change the options by clicking the image and then choosing the small picture icon.