Why take the fun away? It is so much more convienient to be able to post pictures instead of links everywhere. Allowing them will not result in having 10 pictures in every thread, if that is what your worried about. I wouldnt allow pictures in signatures though, because that will result in everyone having the same picture in every post they make, and that gets annoying.
I think pictures should stay, the moderators you have should be able to eliminate any problems that may arise.
*edit... allowing pictures and allowing them in signatures are two different settings, so you can change it so there are none in signatures. Allowing people to post pictures will not be the "dangerous" thing that you think it will be, will just make things more interesting.