I have a intranet web server that stores pictures for our PR department. I ran across the same questions while building a indexing database for these files and found that storing the files in the MySQL database had much slower response times than just storing the files on the file system and then refrencing them from within the database. The response time is slower because you still have to save the blob out of the database into a web accessable folder and then the browser downloads that temp file. (you also want to have a cleanup routine that will delete these temp files)
There are trade-offs for each method:
Storing the files into a database as blobs will probably be eaiser file management especially with a large amount of files. But this way will be slower file access times (we are talking a second or two longer with light access loads) and will take up more drive space with having to store temp files.
Storing the files into the file system with a refrence in a database will have much faster access times especially with a high server load, but the file management will not be as easy (and could get messy with tens of thousands of files or files that change versions often).
I have currently opted to save the files into the database just because of the volume of pictures that they have and that there is only three people accessing these files on a limited basis. They can handle that extra second per picture transfer time to save me the heartache of cleaning up after them. If this was for a busy Web server with a only a few hundred files, then I would just save them on the file system.