When you attach a picture to an email in Outlook 2007, Outlook can resize the photos for you. Here’s how to control this useful feature.
http://office.microsoft.com/en-us/outlook/HA102349021033.aspx?mode=print
First, attach a photo to your message.Then, on the Insert tab of the Office ribbon, click the arrow on the bottom right corner of the Include section. You will see the options to resize photos.