A good rule of thumb is that a photo should be between 600 and 800 pixels wide and no more than 200kbytes in size. Even photos that have been resized so as to fit on the screen are still typically carrying a large amount of "cruft" that isn't necessary for display on a web page. The steps here will eliminate that extra cruft and produce an image that is the right size and takes up no more space than is absolutely necessary.
There are a number of options for resizing a photo, depending on your operating system and your budget.
In Windows 7, open your photo in Paint, and select "resize" at the top. Click the "pixel" button and make the largest dimension 600 pixels, the other will fall in proportionately. This is a very practical size for MV. You're done.
Fortunately, Photoshop has a feature called Save for Web that is specifically designed to scale images to an appropriate size while eliminating everything from the photo that isn't needed.
In the upper right-hand corner, under the Save button, set the image type (JPEG or GIF) and adjust the settings. JPEG works better for photos, and GIF generally works better for simple computer graphics.
For JPEG images, a quality level of 50% is usually sufficient to preserve enough quality for posting an image to the web.
For GIF images, you'll have to adjust the number of colors and watch the preview image to see how close to the original it gets.
Pay attention to the file size shown below the preview image and watch how it's affected by the settings you choose.
When you're satisfied with the settings, hit the Save button and tell Photoshop where to save the image.
Start by opening the photo in Photoshop. Now would be the time to do any cropping of the image you may desire to remove undesirable elements from the photo.
Step 2: Save for Web...
Select Save for Web... from the File menu. This will open a dialog where you will see the original photo and one or more previews of the photo as it will look after being saved.
Step 3: Resize Picture Dimensions
In the lower right-hand corner of the dialog there are a couple of tabs, one of which is Image Size, hidden under the Color Table tab. Select the Image Size tab, and you'll see the original size (in pixels) of the image as well as text fields where you can specify a new size.
The most important dimension here is width. We can generally live with whatever height ends up being. If the width of the original image is more than 800 pixels, specify a new width of something between 600 and 800 pixels. The height of the image will automatically adjust to maintain the image proportions.
Once you've specified new dimensions, you can hit the Apply button directly below the image size and your preview will resize to the dimensions you've selected.
Step 4: Image Type
The next step is to choose what kind of image you want to save. In the upper right-hand corner of the dialog, below the Save and Cancel buttons, there's a selection for image type. Generally, this should be either JPEG or GIF, depending on the image itself. Generally, photographic images render better with JPEG, and computer-drawn images (illustrations, screen captures) work better with GIF.
Step 4a: JPEG Images
If you've opted to save the image as JPEG, see some options right below the buttons that are specific to JPEG images. The most important of these is the Quality option, which has a huge impact on the resulting file size of the saved image. Generally, JPEG images can be set at 50% without any visual degradation of the image. Adjust this value as low as you can while visually comparing the preview image to the original image. Also note the file size shown right below the preview image, and watch how the Quality setting affects file size.
Step 4b: GIF Images
1) Choose the photo you want to resize in iPhoto.
2) Select Email from the menu on the bottom right. A menu box will pop up asking you to select the size you wish to send. Select the size of your choice and click on 'compose'.
3) Your resized picture will appear in an email window. Control + click (or right click if you use a 2 button mouse) on the photo to save it to the destination of your choice.
There are also a number of downloadable freeware applications that will reduce photo size. Try searching on CNet Downloads or VersionTracker.
Additionally, there are a number of free, web-based services that can shrink your photos for you: