I'd prefer the ability to specify a size (approaching having a ruler and more rich-text-like capabilities) or proportional size options for resizing. But as you asked it, I'd say to display to fit the width of the screen on a device whose screen is < max.
+1 for a request for the ability to resize [not rescale] an image in a note. Why? My notes often collect information from several sources, often taken using selective screen captures, and integrated into an outline or set of written notes. It'd be great to resize the images while maintaining same total pixel counts in the originals.