There are two types of ways of adding images to an email. The most common way is to upload the image to a server and just link to the image in the email body. The other way is to embed the image into the actual email itself as an attachment.
There are pros and cons to both approaches and you should be aware of these before you send images in your emails.
Embed Images - Pros
On a lot of email clients the images are visible by default and there is no need for the recipient to take extra steps to download images. Outlook generally will show images from contacts which are in your address book. Note that Gmail and other web based email clients are starting to change this behavior and treat embedded images the same as linked images.
Embed Images - Cons
The recipient is forced to download the images when the email message is received. This can an issue if the email is quite large so always send a test email to yourself to ensure that your are not upsetting your customers.