For Drupal 6 there is the handy image file filter module to insert images into the content.

Update: the evolution of the module is very fast, and the features are also changing. The usability is improving, but some hints below may become misleading in time.

After the setup, you just have to upload the image file to the node as an attachment, set the orientation, and that's all. Look:

IMGFilefilter.png

1. Download the IMG Filter module, and install, as usual. You have to also enable the upload module from the D6 core modules.

2. Some small configuration steps:
- Set the upload settings at admin/settings/uploads. Set not to list the files as attachment.
- Set the IMG Filter settings (admin/settings/img) as appropriate. The size should fit to your actual theme's grid.
- Do not forget to enable the IMG filter at Input formats (admin/settings/filters)
- Check whether the upload option is enabled for your content types, where you want to display the images. Also set here the position and size of images to be included into the content type. (/admin/content/types)

3. Create a new content, set title and description. Upload an image file, and set the image filter to position your image in the post. The file name must not have any space or other tricky character. If you have just one image, choose one of the basic options. If you want to have more image in the same post, set the advanced IMG filter option. Type img:xx in brackets [] where the uploaded images should appear. xx is the xxth image you uploaded to this node.

CreateStory.png

4. As option, you can also use the thickbox or lightbox modules, as soon as they will be available for D6.