It stayed in your "my pictures" file (at least mine stay there...) but it goes to the end of the file (kinda' like going to the end of the line...??). If you rearrange your pictures by name, the medium image will pop up right next to the original.

The other thing that happens with mine (though I haven't a clue how this started happening), if I right-click on the medium image, I get the option of uploading it directly to image shack with that right-click!!

Just remember, now that you're using imageshack, you won't be able to see your own pictures at work!