That means we could expect to see other Google apps using the same model. Google Docs could have an album that contains all the images uploaded to your documents, spreadsheets and presentations. The Gmail album would include all your image attachments. This way, you wouldn't have to upload the same image multiple times and you could reuse in other Google sites.
It's unclear why Google doesn't provide in the dialog an option to search your images from Picasa Web Albums. You still have to know the location and the name of an image. Google could extend the photo picker to documents and other files, move Google Desktop online and provide a unified way of uploading, organizing and sharing your files.