update
Hi
I haven't tried it in as much as I've uploaded image untouched. I suspect that all images are resized automatically for the designed pages.
However I would suggest that you resize the images to a reasonable size befor uploading because if you are using photos some of these can be mb big and the upload processor time would be hideous. I'd resize all images to 96dpi and 640X480 pixels. Jpeg for graphics PNG for photos
HTH
Ian