The problem is that Gallery is software and not a service. Therefore, I have to supply the storage space and bandwidth. I do have well over 5 GB of storage space and 120 GB of bandwidth at my disposal (thanks Dreamhost, which recently added unlimited domains to all their plans). I probably couldn’t consume that much space and bandwidth, but when I can upload up to 2 GB per month for $25 a year (note to web services: this is a good price point) and the photos can be dowloaded unlimited times, Flickr wins out.
That said, Gallery 2 is extremely slick. They’ve moved up to using a database backend instead of a patchwork system and the install process is like butter. It’s interface is also a lot friendlier to people that simply want to browse photos. Also compelling is that you can give accounts to people, allowing them to upload on their own. You don’t have to force them into getting a Flickr account (and then set up a group/use a common tag/some other kludgy solution).
I’m thinking about adding a gallery for readers to post pictures. Anyone have any other ideas?