I believe when Apple designed the phone it was with the idea you would save all your photos to your computer and just retain your better photos on the device.
However, I see so many users today who never transfer their photos off their device and eventually the phone crashes and they lose all of them.
Awww man so true. I tell everyone I know that they should transfer their pictures. I've seen too many people lose everything cause their phone crashed. Its so easy to transfer pictures these days. But what I do is, whenever my pictures start to add up, I just open iFile and wirelessly move all of the pictures to Dropbox. Then that way I always have access to the pictures (I have a lot of pictures work related that I need to have access to at all times). But of course, their are easier ways to copy pictures whether just plugging your cable into the computer and access the device like a camera, iTunes wifi sync, regular itunes sync, iCloud etc. But for me, iFile to Dropbox wirelessly works best for me.
OP, I remember recently seeing some feature or option recently that allows for lower quality pictures. I'll do some googling and if I find anything I'll post it here for you.