Local uploads have been disabled on the English Wikinews from the start. Uploads are only possible through the Wikimedia Commons. This is meant to make the upload of "fair use" images as well as images under other non-free licenses impossible, and generally encourage use of the Commons. The decision to disable uploads on the English Wikinews was made in accord with Jimmy. Uploads on the other wikis were only enabled to begin with in order to allow them to replace the logo. Since that has now happened, local uploads are disabled there as well.
In order to nicely integrate a link to the Commons into the sidebar, I suggest using [[MediaWiki:Currentevents]] as well as [[MediaWiki:Currentevents-url]], which are pointless in Wikinews anyway since the entire wiki is about Current Events. You can point those directly to [[Commons:Special:Upload]], which will then put users on the Commons upload form if they are logged in.
The decision to disable uploads is not permanent and subject to change. The reasoning behind this decision is as follows. Wikinews is a project which directly competes with major news organizations, magazines and newspapers. It also allows and encourages commercial use of its content. Fair use of photos from a news agency, for example, is very difficult to justify under these circumstances. But regardless of the legal arguments, there is also the practical argument that Wikinews will soon be perceived as a threat, because most of its stories are based on reporting done by others -- and we give it away for free, while they charge money. These people will eventually try to stop us by all means necessary.
There is a distinct possibility that we will face issues similar to SCO v. Linux, where a competitor accuses us of stealing content -- even if we didn't. Fair use, being so volatile in its definition, makes a successful attack more likely and opens us up to additional legal risks. That is why uploads will not be enabled until it is fully clear under what circumstances non-free licenses can be allowed.
Work is currently being done on the English Wikinews to formulate a "fair use" policy. I encourage other Wikinews editions to do the same. Fair use on Wikinews could encompass things like logos, graphics, screenshots -- or photos that have not been produced by competing organizations and companies. Once that policy is written, we shall submit it to the Board for approval and possibly legal review. If it passes that review, uploads will be re-enabled. The same goes for all the other Wikinews editions.
In the meantime, I ask you to only upload images under free licenses or in the public domain, directly to the Wikimedia Commons. Uploading them there does not affect the image syntax at all -- you can use them like you would use a local image. But they will not show up in Wikinews Recent Changes.
If the Board would like this decision to be reverted, please let me know. Otherwise I will coordinate the next steps as described.
All best,
Erik