Assuming you are using Twenty Ten, Twenty Eleven, or one of the several Themes that derive Post Thumbnail (i.e. "featured image") feature handling from either of these Themes:

* The Featured Image is applied to the header image, if and *only if* the dimensions of the Featured Image exceed the dimensions of the header image.
* The Featured Image is *not displayed in the Post Content* by default; you must manually insert the Featured Image into the Post Content, as you would any other image, if you want it to appear in your Post.

**EDIT**

To have a custom image size, such as 300x300, you can use [`add_image_size()`][1]. For example, add the following to `functions.php`:

`add_image_size( 'single-post-image', 300, 300, true );`

Then, in `single.php`, you can add:

`<?php the_post_thumbnail( 'single-post-image' ); ?>`

And your 300x300px image will be inserted wherever you place it.

(Note: you may need to regenerate existing Thumbnails.)


  [1]: http://codex.wordpress.org/Function_Reference/add_image_size