Have you recently notice that Picasa Web Albums storage counter shows more "free space" comparing to a couple of days ago. Here's the reason, Google says "We recently made a change whereby any pictures 800 pixels and under don't count towards used PWA storage. The new GB numbers you're seeing are the result of quota recalculations that were made,"
The new feature encourages users to upload smaller images. If you use Picasa to upload your photos, there's a setting that lets you pick the dimensions of the photos that're uploaded. The "small" option is recommended "for publishing images on blogs and webpages". Blogger users who resize their photos before uploading them will no longer have to buy extra storage if they're prolific.
Now, uploaded images that're 800 pixels or smaller and "all videos under 15 minutes also don't count towards used PWA storage". That means you can now upload short videos to PWA without worrying about the file size.
800-pixels is a good size for sharing pictures on the web, but if you prefer uploading your images at a larger size for better quality (archival or print), and you're nearing the 1GB limit, you can always purchase additional storage for as little as $5/year. To check your available storage amount scroll to the bottom of your home page or view your settings.
And, those who've already purchased additional storage, any existing 800-pixel images or videos shorter than 15 minutes will no longer count toward your storage limit.