How to attach an image directly inside iOS Mail app while writing an e-mail?
Press and hold anywhere on the text area. A contextual menu will appear. 
If there is no text on the message, the option to the right will say "Insert Photo or Video".



If there is text, the options will be "Select", "Select all", "Paste" and an arrow. Clicking the arrow will show "Insert Photo or Video"



Click on it and select the Photo or Video you would like to attach.