Google will continue to host your posts and pictures, so you don't need to buy a hosting service. The old .blogspot.com address will redirect to your new domain. This way, you'll keep your visitors and the beloved search engine rankings.
There's also the option of using FTP publishing, but you need to pay for hosting, and you'll also miss features like: dynamic serving, managing layouts using drag-and-drop. The advantage is that you have more control.
Although Blogger is not yet a part of Google Apps for Your Domain, it will certainly be included.
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