actually, if you're using the upload function for images, then you ARE using the LJ scrapbook because that's LJ's image host for everything except user icons -- you're just not formally creating a gallery via the main Scrapbook page. If you dig around in your scrapbook, then you will find an "unsorted" folder that contains them all. (From Free Accounts when you click the "Insert Image" tab on the update page, you get this error: "Upgrade your account to access ScrapBook storage.")

Here's the last DW newsletter if you want to read. The bit on image hosting is in the last para of section 2: http://dw-news.dreamwidth.org/20516.html