Image compression plugin

I am in a great need of a plugin that will compress images file size, and maybe also suggest for the blogger a better width/height then what they upload (GIANT digital camera files).

My situation now is that that hard disk space is disappearing fast and my users ask me - what do we do when we have used the space? I could of course increase allowed space and by more more storage space, and that is probably what I will do, but its not efficient to store +2MB images...

I tried Smush IT plugin, but Yahoo has a file size limit of 1MB, so most digital camera pictures will not process...

Any thoughts, tips?