Both are valid approaches.
They have different advantages/disadvantages.
Storing it in the database means you need to add extra code to change the image to a representation which will fit inside a INSERT/UPDATE statement (base64 is one approach, and requires equivalent decode, but you could just use mysql_real_escape_string()). Although you can't query the image directly (other than finding exact matches) it may reduce the number of seek and I/O operations required to retrieve the data compared with looking up the path in the database then retrieving the file.
It's also a lot simpler to set up replication of a database compared with setting up replication of the database AND the filesystem if you run on multiple nodes. And there's the issue og keeping filesystem and database backups synchronized.
OTOH, using a filesystem makes your data tables much smaller, and therefore faster to retrieve records from.
which makes a directory into the users images folder
You certainly don't want to allow users to upload content directly into your webserver's document tree - regardless of which route you take, the data should be stored in a location not directly accessible by the webserver but accessible by your code.