Twitpic has nice “reply” integration with twitter, but it lags when I send a picture via email. And it is generally buggy.

Skitch has wonderful response time when sending via email and good quality pics. It also has good integration with Twitter, but not for replies, those go to email. It allows embeds and has multiple privacy settings.

My vote’s for Skitch, but it would be nice if replies went to Twitter or email or both depending on how you’re feeling.