Life is God's gift to you......what you do with your life is your gift to God.
I have been doing my watermarking on Picasa. I think you can change the size as well. I'm not real up on changing photos, so I have to use what is easiest and accessible.
I use Picasa too and haven't had any problems with it. I had started with Photobucket but then decided I hated it - they changed the set-up, keep screwing up my sizing, etc. Wasn't using watermarks back then, so I don't know what to tell you on that score, but since you use Blogger anyhow, you should have unlimited space for your pics on Picasa.
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