One of the features that I've really missed in .Text and CommunityServer was the ability to seamlessly upload images whilst writing a post. Having this feature means that you can write the post and add images from your hard-drive without having to either: A) Ftp the image up to the server or B) navigating away to another page to perform the upload. Here is a small picture of the image upload dialog in SingleUserBlog:

At this stage I've kept it all pretty simple. You just upload the image and it will store it in the \Data\Images folder with a guaranteed unique name. After that it simply returns the url of the image to the screen so that you can copy it, close the dialog and use it in your post. No AJAX here folks :-)
As I just mentioned, the images themselves are all stored in the \Data\Images directory. I had thought about storing them in the post folders but that would require extra effort as I would then have to maintain an index of the images and it would also be harder to share images across multiple posts. One of the next tasks will be to create an image gallery so that the administrator can quickly view and maintain all images in that directory.
Ultimately I plan to make the UploadImageDialog smarter. I'd really like to have some basic controls on that window which would allow you to optimize, rezise, compress, etc images. This would make it much easier for graphics impaired users such as myself to take a quick screen print and ensure that the resulting image which gets displayed on the blog is small and fast to load. The dialog and image gallery viewer could even warn you about images which are large and offer auto-optimizations. The code that I'll be using to do the image manipulation will be the same code that I wrote to manage project icon images on the ProjectDistributor site. There's a demo of that code that you can download and play with here:
http://www.projectdistributor.net/Projects/Project.aspx?projectId=125