Adding Images to Posts

Simply use the “add media” section contains four buttons: add image, add video, add audio, add media. When you click on add image, you will see a panel come up where you can choose whether to upload an image, use an image from the gallery (images in the current article) or images from the media library (uploaded in any post or page).

There is also a media library section, where you can view, edit and delete media files (but not add).

Source: http://codex.wordpress.org/Using_Image_and_File_Attachments