I think you have to have Hosted Galleries for the same reason Plugger suggests, it's a service, if most of the other programs have them then you gotta provide them too or the 'appearance' that your program is falling behind and not doing everything it can for webmasters is out there.
Free content, free galleries, free hosting, pretty soon it will be free paysites given away complete with members area, in return for the exit traffic.
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