Gmail recently overcomes the hurdles adding inline images while composing email. I have explained some workaround sometime back, moreover I am still getting lot of traffic to the post. I think gmail recognized the fact. Yeah it is now added as one of the lab feature. Enable the lab feature for inline images like below.
Once you enable the lab feature the upload icon will appear on the mail composing window like below. Enjoy mailing..
[...] images are very effective to communicate ideas. Some times back I wrote an article how to insert inline images in gmail but now google mail provides an opportunity to simply paste or drag drop images into the compose [...]