Hit the "Upload a File" button below the post editor, then hit "Choose File..." You'll then have the option to take a new photo or choose one from your Camera Roll. Once uploaded, you'll see it appear below the post editor box, and you can hit the button to insert the thumbnail or the full size image into the post.
Note that your device must be running iOS 6 or 7 to do this, as iOS 5 and older do not support file uploads in Safari.