This feature is coming soon with Buddypress..
Members of a BuddyPress installation will be able to create their own photo albums. These albums can be shared with friends and groups.
Each member will be given a certain amount of space, which can be set by the site administrator. Albums and photos can be tagged. It will also be possible to browse public photos via photo tag pages that other members can browse (just as you browse blogs via tags on wordpress.com).
Photos can also be tagged to a group as mentioned previously in the group component overview.
Photos can be uploaded from a members computer, and will be re-sized accordingly using the built in WordPress image manipulation functions.