This feature is something I deeply miss coming from Blogger. For those of you who have used Blogger before you would know that when inserting an image you have the selection of 3 thumbnail sizes.
This feature would be fantastic for WordPress. Having that small thumbnail is pointless. It's too small to be useful for anything except for if you have maybe 5 or more images in your blog.
I like to insert a medium sized image into my blog post at the top right hand corner in most posts , the way I have to do this now is insert the full size and then shrink it manually which causes the image to become very ugly since it hasn't been resized with any software.
It would really make the WordPress service better if there could be a selection of thumbnail size (i.e. small, medium and large).
I would also like to see the options for border, horizontal space and also vertical space which are only offered when inserting an image via its URL.