How to Attach Picture to Existing Email
I am assuming you are using iPhone 4 from your tag.


Press Home button
Go to the Photos app
Long hold on the picture that you want to attach to the email. A 'Copy' pop up will appear, copy.
Go back to Mail. 
Paste your photo into Mail.


Note that the photo will be in full size and might make the size of your outgoing mail quite large.