I've been struggling with this. I wanted to insert an image and have it 'near' the text that discusses it, but have the text on that page wrap/flow around the image.
The image I've converted into eps format. I initially tried to use the figure environment (\begin{figure}...), but that merely placed the image at the top or bottom of the page without any text beside it, leaving a large portion of the page empty.
I did some digging on the web and identified the 'wrapfig' package, it seemed a likely solution, but I get a series of errors, and the image appears at the end of the document.
The errors:
Package wrapfig Warning: wrapfigure used inside a conflicting environment on input line 297.
Package wrapfig Warning: Stationary wrapfigure forced to float on input line 303.
Package wrapfig Warning: Stationary wrapfigure forced to float on input line 306.
Which continues for several lines.
What's odd is that one occasion, after compiling, the image appeared exactly where I wanted it, and then on the next it didn't.
[Added a minute or so later] The latex code I have currently:
\begin{wrapfigure}{r}{0.2\textwidth}[h]
\begin{center}
\includegraphics[width=0.18\textwidth]{vec-perp.eps}
\end{center}
\caption{A}
\end{wrapfigure}