Your html/css is irrelevant. This is the link being outputted:

http://30.media.tumblr.com/tumblr_l9zdbaygDk1qbdspko1_500.jpg

Notice that _500 at the end. That is the width of your uploaded images. So change the settings when you upload. And you already changed your theme since I originally saw this so that is all I will say. I refuse to help with your theme since you will probably change it again tomorrow. But maybe someone else will.