Is there any problem with doing this for my other websites? seems like i got save quite a bit on cpu and bandwidth
Maybe because WordPress.com & blogger.com are restricted/cannot be access in certain country. For example, PR of China. But if your visitors are not from those restricted countries, I see no problem of using the free services.
We use Wordpress's video hosting service for a few clients. Better than Youtube because of those pesky copyright problems. I see no problem with hosting your images there either, except for the restricted-countries issue.. if you care about traffic from those countries.
You can use imugr instead of wordpress as it is a image storing and sharing site and also servers are good so if you embed them in a site it does not affect load time.