Photo Uploading problem

Hello, I was creating a post and as I began to upload pictures I received a message that my
1G space was full and would I like to purchase more space. What? Has anyone run across
this problem?
Apparently, when one uploads a picture to Blogger that picture is stored in a Picasa Web album.
I checked - there are a bunch of pictures there - some I haven't used in posts. So, the dilemma.
Do I delete posts? Do I go through Picasa to delete pictures? If I delete posts and or pictures
the problem will arise again.
Is there another way to apply pictures - Photobucket, Flickr etc...everyone eventually has a
maximum capacity - don't they?
Wondering if anyone has run across this and what they've done to resolve it.

Thanks much,
Kathy