Had the same issue today and found another option with knitr 1.16
when knitting to PDF (which requires that you have pandoc installed):
![Image Title](path/to/your/image){width=70%}
This method may require that you do a bit of trial and error to find the size that works for you. It is especially convenient because it makes putting two images side by side a prettier process. For example:
![Image 1](path/to/image1){width=70%}![Image 2](path/to/image2){width=30%}
You can get creative and stack a couple of these side by side and size them as you see fit. See https://rpubs.com/RatherBit/90926 for more ideas and examples.