Images need to be a maximum of 800px, which is the table size. More and the table will 'blow out'. In saying that, do not use small or pixelated images - they do not add to your design project.
Image size and quality is really important.
If you have an image larger than 800px, you can do one of two things:
Use in Photoshop the Image Resize command.
Create a thumbnail and hyperlink off the thumbnail to the large image.
Either is good.
When you create a thumbnail image with the same filename, but with an 's' after the main filename, before the .jpg
Insert the thumbnail into the page and then using the Link command and the yellow file folder, find the larger image and create the link.
Check it works by function key F12, (preview in the browser).
See the example below:

Poor quality and very small images make the webpage look under-rated!