Good on you for reading the FAQs blog http://faq.wordpress.com/2006/05/29/i-cannot-upload-images/and the pink sticky at the head of the forum http://wordpress.com/forums/topic.php?id=467&replies=2.
I can confirm that just as the FAQs says: If you are having problems uploading images then the most likely causes are:
* The image is too large (filesize)
* Your connection is slow
* There is a problem between your computer and the WordPress server. (You do not have a direct line here. Your connection will go through any number of hubs before it gets here and one problem along that line will cause you problems.)
I've noticed you have got your flickr widget configured and it's working well. Thumbnails with original photos hosted by a third party is th recommended way to go. Many people are on dial up and if you fill your blog with larger photos it takes forever for your site to load. As these folks are also paying in accord with the time they spend on line that can really drive down the number of visitors you get to your site who actually stay instead of just clicking out.
Older browsers can cause problems for people viweing your blog too. I find that my blogs can be viewed best on a firefox browser and I hear that they display well on mozilla too. The others O can't say because I don't use them.
If you have a problem that isn't described in the two FAQs resources then you can use the forum search box to find threads related to the difficulties you encounter.
If those are not giving rise to a solution then I think a better way to get help will be just giving a quick list of information pertaining to your own situation and difficulty. THis is the kind of information that helps other folks help you here on the forum where everyone is a volunteer.
Operating system & version
connection hi-speed or dial-up
browser & version
size of the photo
link to the photo
When images do no immediately appear it can be a problem with clearing your browser cache. Everything in your sidebar is cached. Try forcing the browser to clear and couple of times. Hold the ctrl button down and press F5 simultaneously. Also sometimes signing out and signing in can also do the trick.
Welcome to the wordpress community. Be patient because if I haven't said anything that proved to be useful to you someone else will come along and lend you a helping hand. :)