In Outlook 2003 I was able to resize my pictures before sending. Where is that option in Outlook 2007?
After you have attached your picture as a file (and not when inserted in-line) you can press the little expand arrow in the right bottom corner of the Include section. This will show you the Attachment Options pane which allows you to resize the picture.
In the Attachment Options pane there is an option at the bottom which says "Show when attaching files." When you select this options the pane will automatically show each time you attach a file. This will safe you a click and acts as a great reminder to resize your images before sending.
In Outlook 2010 this option can be found in Backstage;
File-> section Info-> option: Resize large images when I send this message
In Outlook 2010 you can no longer choose between different sizes but the image will be resized proportionally so it won’t be larger than 1024×786 pixels.