As a newish member of blogger I ran into storage space problems recently without realising it, I do not use Picassa 3 to edit or store my photos preferring Windows Live Photo Gallery, which is probably why I was not aware of any issues with Picassa web albums.
I gather that others have had the same problem too, some more seasoned bloggers will have been aware of this already so I apologise in advance for this post. This is my take on the problem there are obviously other methods too you may want look into.
Photographs that you post on your blog are stored in Picassa Web Albums part of your Google account.
It seems you are allowed about 1 GB (Giga Byte) in total, unless you purchase additional memory. This seems adequate unless you do as I did and uploaded photos that had large file sizes. I actually ran out of my allocation and could not upload any pictures without deleting some old posts to free up memory.
If you open a New Post page, you will see on the left Compose and HTML select HTML click on photo image next to Link and a page will open for uploading photos you can select from small, medium and large file sizes. More importantly it will tell you how much memory allocation you have left, in my case it is now 586 MB of 1026 MB after deletions in Picassa Web Albums. you can switch back to Compose after uploading your photo.
So what is the ideal size of a photo file? I now like to use about 500Kb per photo, but it does depend on how large you want to see it on your post.
This may mean the average photo file size will want reducing in one of three ways.
1. Your camera if it will allow on it`s menu, you can select a lower resolution setting, 3 or 5 MB is ideal
2. Digital photo editing programs that allows you when you save the photo to select JPEG files from large, medium and low compression sizes from the original. Windows Live Photo Gallery is one.
There is also a free one you might like to look at Here also, you don`t have to download the program to use it.
3. As previously explained select HTML rather than Compose as this has a default setting of medium file size.
Experiment to see which is best for you but remember with digital photo editing programmes that most post editing, like `sharpening` can increase the final file size. You can usually check the file size by right clicking on the image and looking under Properties, Detail.
PS. I have been advised by a fellow established blogger that this can all be done with Picassa 3 as follows,
David, you can get extra storage in Picasa Web Albums which you can easily download from the internet, and you get a small amount of space for free. If you need more, the cost of renting the extra space is very small - I pay just $5 US a year for 20GB. When you load photos to your blog you can nominate where they come from - e.g. from your Picasa Web Albums. in Blogger the default settings put uploaded photos into you Blog's album, which as you say is quite small, but once you start using Picasa Web albums, you can have as much space as you like. You just have one extra step to do: upload the photo to a Picasa Web Album, and after that upload from there to your blog. I can provide further info if you want...
I had a look and you can select a appropriate file size when uploading to a web album on Picassa the following is how to upgrade the price at present appears to be around $9.99 per month
Go to your Blogger dashboard. Top right there is a thing that allows you to access your Profile. Click this.Choose Account settings. Choose "Products" and then "Picasa Web Albums" You will probalby just see the basic setup, with the 1GB storage you already know about, but down at the bottom of the screen is a place where it says "Manage or Upgrade" your storage, Choose that and it will explain what to do. Looking at it today I see that the deal which I have is no longer available to new customrs, but the range of offerings is still excellent value. Hope this is some help...