usually an uploaded file is compressed to be stored, it also depends on the file type, .jpeg for example is quite a lossy file type (it looses quality through compression) whereas .png is a bit better.
Personally I use the ol photobucket as the host and just link the image to the boards
Correct, if you want full quality use photobucket / Flickr (or whatever you like)... it's cost far too much to store all your images at top quality, hi-resolution (it costs enough as it is!)