To my mind, it comes down to device. If it is a 800 x 600 pixel e-ink reader, then the images should be scaled down to just a bit smaller than that. For the tablets, it is a different story.
Design for the small screens should not be the same as for the bigger ones because pull quotes etc for the big screens that work great only create reading problems in the smaller ones. Inset pictures only squeeze the text or become microscopic without detail in the smaller ones.
I have just been working on this problem with some very nice commemorative pdfs put out by the US Marine Corps. They have inset paragraphs on general topics in the middle of the text flow that are fine on a big page, but would end two or three pages later in an e-ink reader. The reader would lose their train of thought if allowed to stay in place. My ultimate solution was a link to these general topics (and back). Pictures are not super clear on e-ink readers because of the narrow grayscale range, so they need to be a big as possible. A tablet can display images in color and hi-res.
The bigger the better, but only if the machine can display them to advantage and it doesn't have to waste cpu cycles resizing, slowing everything down.