Just relaying the answer to a question, put to me by Sugar.
When you upload pictures to your Blogger blog using the picture upload tool, these will be put into a Picasa Web account, associated with your Google account. There is a limit of 1 GB (1,024 MB) on Picasa Web. Check here for your own usage status.
If you want to avoid exceeding the account limit, store your graphics and pictures elsewhere (e.g. Photobucket or Flickr) and link into them on your blog. This requires you to go to Edit HTML and input a little snippet of HTML: img src="URL" at the location of your picture.
Please note: In entering this code on this blog, I have had to omit the opening bracket "<" (placed before img) and closing bracket ">". Replace URL with the actual link, and do not type the quotation marks around the brackets. Typing example HTML here will be interpreted as actual code and processed as such, leading to unpredictable and unwanted results.