Not Depending on Blogger
Okay, I've solved the problem with the photo posting at least temporarily. I didn't like using Flickr to upload photos because the small size that Flickr automatically creates is too small for my liking and the next size up (medium) is so large that it throws the sidebar out. I like to use the large size that Blogger provides so would like something roughly equivalent from Flickr.
So, what I've done is grab hold of the html of the photo above from Flickr but changed the sizing by substituting what was there for width 375 and height 250 which seems to work fairly well. Okay, if it was a portrait photo as opposed to landscape, the width and height would be transposed but I'm going to try it for a while and at least it's an option in future when Blogger decides to go on strike.
For those who have a Flickr account and also aren't happy with the small size photo created by Flickr but aren't sure how to do this, this is what to do. Just click on the photo in Flickr that you want to blog and you'll see 'available sizes' above it. Click on small or medium (doesn't matter which as you're going to change the size). Scroll down and copy the html, then go to Blogger and paste the html into your post. After that you just need to change the height and width within the html to those that you prefer. Some people use the 'Blog This' button but I'm not sure you can change the sizing this way. I'm also not exactly sure how to centre the photo rather than have it left aligned as it is now.
So, after all that, I'd better explain what's in the photo. There are the Fetching fingerless gloves in Debbie Bliss Cashmerino Aran which I'm knitting for my One Skein Secret Pal and a couple of pieces of handmade jewellery I've made for myself. The necklace is just strung on nylon thread and the bracelet is crocheted with wire and beads added.
EDIT: Solved the problem of getting the photos centred. Just need to add: style="display: block; text-align: center" to the html text after img.