You don't have to store it online with ImageShack or any of those services. If you look below the text box in which you type your replies to people, there is an "Additional Options" link. When you click on that, it expands to show you additional options. One of those is an "attach" option. You can click on the browse button and find the picture on your hard drive so that you can attach it to the message.
I assume this works. I've never tried it before, but that appears to be the purpose of it. Instead of showing the actual image in the message of the body, I believe it just shows a link that people can click on. Those are the links where you see it telling you how many times the attachment has been viewed.