With the latest releases of WordPress (3.5 and above), the media library has been modified to make things easier for you when adding images and other media to your posts and pages. The new interface lets you more easily select images (with improved thumbnail images) and specify URL links along with image sizes.
As far as media library settings, there are only two items you can customize by selecting Settings->Media from the WP dashboard menus. Here, you are able to change the image display sizes for thumbnails and your medium and large size images. You can also change the way WordPress stores your uploaded images.
By default, when you upload an image in WordPress, it is actually stored deep within a series of folders. Within the wp-content folder there is the uploads folder. Going down another level, the folders are divided by year and month (numbered 01 to 12). Your uploaded images are stored in the corresponding year and month folders—which will be included in the URL of your photo. This is usually fine unless you need to reference one of your images by its URL and you have no idea what numbered folders it’s in.
You can disable this month and year folder storage by deselecting the option in your Media Settings. Your photos will then be stored directly in the uploads folder. Some say this will speed up the FTP process should you need to move your files, but I have not yet verified this.