Hiya Bethy,
Looks like the new editor we added doesn't support it. (we'll get that sorted)
But in the interim, just switch to the Enhanced editor by editing your profile.
http://forums.thescene.com.au/user/EditProfile.aspxAnd changing your Content Editor to "Standard" or "Enhanced" (pretty sure both have image upload support.
I'll log this as a bug for the new editor - and will post when it's been fixed :P
Thanks for letting us know