Sounds like your blog template is too narrow for your pictures. You'd need to go into "edit HTML" under the "layout" options, and check to see what size your various wrappers are set to. Do a ctrl+f search in the HTML of your template to find "#main-wrapper" -- there should be a line of code following that that sets the number of pixels. The "main wrapper" is the section of your blog that has your posts; the "sidebar wrapper" is the sidebar column, and you want the two pixel numbers to add up to be just a little under the number of pixels under "outer wrapper," which is the whole width of your blog.
So for example, if you want to be able to post pictures that are 480x306, you need your main wrapper to be at least 500px (since blogger will add a bit of a border, and you want some wiggle room). Which may mean that you need to decrease your sidebar width to increase your main wrapper width, or (if that will mess up the look of your sidebar) you'll need to increase the outer wrapper width to get a wider canvas for your whole blog.
Oh, and once you start messing with the width of your columns, that may mean you'll have to edit the image you're using as your background image, if you have details going along the side -- you may need to find a background image/template that's plainer, so that the text of your posts isn't obscured by the background image on the sides.
Does that make sense? Hope this helps!