If you’re tired of using workarounds or flat out resorting to attaching images instead of having them displayed in your email's message body, your day just got a little brighter. Gmail is providing users with a new Labs feature allowing them to easily add in-line images from their PC or the Web - something traditional email clients have been able to do for ages.
You can check the new feature out by heading to Settings > Labs tab and opting to enable “Inserting images” (toward the bottom). By enabling the feature, you’ll have a new icon on the message toolbar resembling a generic scenery image that will do the trick.
Upon inserting the image you can easily resize and align it in accordance with the formatting of the rest of your message. The feature does have one itty-bitty catch that is somewhat expected: you’ll need to be using RTF mode otherwise the image won’t be seen, and for security reasons, images inserted via an URL will still require recipients to "Display images below" or "Always display images from ..." to view images you embed.