image upload fuctionality in a web application

I am working on a social networking site and I want to implement image upload functionality. So I was wondering, where should I store the images uploaded by any user

1. Some folder in the server itself: I think it will affect the server's performance eventually.


2. Some folder in some shared location: It will make uploading and displaying it back slower.


3. Database as CLOB or BLOB: It will fill up the database unnecessarily.


4. Some external image hosting: It won't be free and secure.

I don't have much idea about. Please tell me which is the best way to store images in terms of reliability and performance.