Richard,
The 'dimensions' of the image are probably not the factor, it was probably the file size.
Currently the maximum file size is set to 60Kb for attachments.
Somewhere around 500 pixels wide looks about right for people using a 1024x768 screen resolution, as it doesn't make the screen scroll.
640x480 fits in a post, and fills the screen width quite well.
As requested by some trouble maker in another topic, I'm looking to put something in place to auto-size the images when they are uploaded, just to avoid having to use the online resizer in the member tools and then upload it to the post.