I would agree with all of the above and add this; it you give your pictures titles or descriptions, it gives search engines something to look for. So your picture "Day at the Seaside", would come up when anybody searches Google images for either day or seaside.

If members use proper housekeeping; put pictures in different folders; set the privacy level for each folder, there is usually no problem.

Except that people can still steal pictures if they want to. It is almost expected. I use FireFox and one of my addons is Photobucket - I can right click on any picture, anywhere, and add it to my own bucket.