This was not posted from an iPhone, mostly because my "mail to blogger" was set in drafts modes, rather than publish.
It would be nice if the iPhone had MMS, then one could post WITH IMAGES from the iPhone, from the iPhone.
I suppose it is possible to attach a photo in email, but most email gateways will not be helpful in getting the image to your blogger account automatically. Also, I do not think it helps that the default for the iphone emails is HTML, which will be rejected by blogger.
Have you had better luck, posting from your iPhone? Does your mail gateway make a difference? Can you post an image, directly from your iPhone?