Google has quietly made a major change in policy regarding storage on Picasa Web Albums. According to the new rules, pictures less than 800 pixels in size no longer count towards used Picasa Web Albums storage. Similarly, all videos under 15 minutes also don't count towards used storage. This means that if you remain strictly under the size limits, you can upload as many pictures and videos as you want without worrying about running out of space.
Storage quota for Picasa Web Albums users have been recalculated to show the new figures. So if you have a lot of small sized images on your account, like me, you will see increased free space on your account.
Alex Chitu suggests that you set the upload size of your images in Picasa Web Albums to less than 800 pixels to take advantage of the new storage policy, and enjoy essentially unlimited storage space.
It should be noted that the 1GB limit on each account is still enforced, for those images that exceed the 800 pixel size limit and videos longer than 15 minutes.