i would def do the pics with the annoucment in a more postcard type like a birth annoucment. people will actually keep that more than if it were just a card, and to send a card and photo seems like overkill. all the annoucments i see are simple and casual, like a one liner of save the date which would be great on a photo.
a real engagement package will cost a lot, but if you can find someone to take them on the beach or something and go online to snapfish, or even just go to picture people, you can write your date right on them and be done in one snap. it will actually be cheaper than getting annoucments and yet you still get the photo aspect.
i think though annoucements, unless you live in the hamptons, should be more casual, so this is def a place to SAVE money!!! unless you really want professional engagement pics, this is not something that will be "remembered" in the big picture. make a list of all expenses and put them in order of importance, like where does you dress or the flowers fit in your budget? something like annoucements or invitations are an easy place to save money (you could also do them yourself if you have a good printer but you still will pay for the paper and ink)
as for photos in the invitations themselves, i live in nj and we dont do that here, lol. seriously, the invitations usually have so many layers of papers in them like envelopes, directions, tissue paper(never understood that one), ect, a photo would just get lost in the shuffle. we do put wedding pics in the thanks yous though. good luck.