Why does Messages app take up so much space?
Yes, videos and photos are stored in messages and they take up too much space. Try deleting any large discussion thread you do not need if you would like to free some space. Or, if you would like to weed out individual photos or videos, you can tap and hold on any message bubble for the context menu. It will appear with two options: "Copy" | "More". Tap "More" for a list of checkboxes to appear on the left side of the screen. This allows you to easily delete one or more (large) individual messages.

Up to iOS 6 messages just weren't in the usage tab, and consequently one couldn't easily see how much space it consumed.

Also note, that you are just deleting those messages off of that device. If they are iMessages, and you have other devices (a Mac or OSX device) with those accounts synced there, the messages will stay there.