How do you deal with diagrams and sketches?

I have a directory called notes that has a bunch of separate text files. Now I've been slowly adding Word files because often I want to include an annotated screenshot.

I've often wished I could paste images into my source code. My editor would generate something like:

  /*IMG: BASE64 (or some other image encoding) of the image */

I do ascii art in some places, but too often I have a comment that just says "see flow.png in the documentation directory".