I just found this out and thought it may be useful for iPhone users.
Most of us already know of the blogger.com feature where you can setup an email address @blogger.com where you can send an email to that address and blogger would either publish it immediately or save it as a draft post for further review.
This can be found under Settings>Email>Mail-To-Blogger Address.
I found out that if you use your Yahoo email account on your iPhone as your default sending account you cannot properly post images. You will get a tag that says "img src="cid:" and blogger fails to display the image you attached.
I solved this by using gmail as my default sending account.
To do this, go to mail>sending>default account, and choose your gmail account.
From this point I could just click a photo, send it as email and add my text, hit send and I find it on my blogger.
This this post was done through sending an email in the manner described above.