Upload photos

Q: How do I upload photos to existing post?
A: Updated post editor

Please go to settings>basic>select post editor.
Choose new editor. Save settings
You can change back and forth, if you wish, later.

If you wish to upload photos to your existing post. Click:

1. edit post
2. "add image" icon. (on the "compose mode" tool bar, next to Link)
3. browse (max 5 photos at a time)
4. upload image
5. done 
6. publish post

You have to upload them one at a time to your post editor where you can arrange them (left/right/centre), choose the size (small/medium/large) add captions and some text. Then click publish post. All your photos will appear on your post. 

An overview of the updated editor:
http://www.google.com/support/blogger/bin/answer.py?hl=en&answer=156829 

Another way to add photos

If you have Picasa, fill the tray with photos you wisk to add to your blog. Upload photos to your blog directly by using the button "blog this". The photo will appear on a new post. You cannot insert a photo to an existing post by using [blog this].

source: http://www.google.com/support/forum/p/blogger/thread?tid=67a582c85b9e1474&hl=en