My solution uses angular-file-upload on the client and uses connect-multiparty to handle the file upload.
The images are stored directly in the database which limits their size. I have not included the required code to check the image size.
set up
 bower install ng-file-upload --save
 bower install ng-file-upload-shim --save 
 npm i connect-multiparty
 npm update
all.js
add angular-file-upload scripts
            ...
            'public/lib/ng-file-upload/FileAPI.min.js', 
            'public/lib/ng-file-upload/angular-file-upload-shim.min.js',
            'public/lib/angular/angular.js', 
            'public/lib/ng-file-upload/angular-file-upload.min.js',
            ...
config.js
Inject angular-file-upload dependency
...
var applicationModuleVendorDependencies = ['ngResource', 'ngAnimate', 'ui.router', 'ui.bootstrap', 'ui.utils', 'angularFileUpload'];
...
article.client.controller.js
Use angular-file-upload dependency
angular.module('articles').controller('ArticlesController', ['$scope', '$timeout',  '$upload', '$stateParams', '$location', 'Authentication', 'Articles',
function($scope, $timeout, $upload, $stateParams, $location, Authentication, Articles) {
    $scope.fileReaderSupported = window.FileReader !== null;
    // Create new Article
            $scope.create = function(picFile) {
          console.log('create');
                      console.log(picFile);
        var article = new Articles({
            title: this.title,
            content: this.content,
            image: null
        });
         console.log(article);
         $upload.upload({
            url: '/articleupload', 
            method: 'POST', 
            headers: {'Content-Type': 'multipart/form-data'},
            fields: {article: article},
            file: picFile,               
        }).success(function (response, status) {
              $location.path('articles/' + response._id);
            $scope.title = '';
            $scope.content = '';
        }).error(function (err) {
                $scope.error = err.data.message;
        });
    };
    $scope.doTimeout = function(file) {
         console.log('do timeout');
        $timeout( function() {
                var fileReader = new FileReader();
                fileReader.readAsDataURL(file);
             console.log('read');
                fileReader.onload = function(e) {
                    $timeout(function() {
                        file.dataUrl = e.target.result;
                         console.log('set url');
                    });
                };
            });
    };
    $scope.generateThumb = function(file) {
        console.log('generate Thumb');
    if (file) {
        console.log('not null');
         console.log(file);
        if ($scope.fileReaderSupported && file.type.indexOf('image') > -1) {
            $scope.doTimeout(file);
          }
      }
   };
}
create-article.client.view.html
update the create view to handle file selection and upload
<section data-ng-controller="ArticlesController">
<div class="page-header">
    <h1>New Article</h1>
</div>
<div class="col-md-12">
    <form name="articleForm" class="form-horizontal" data-ng-submit="create(picFile)" novalidate>
        <fieldset>
            <div class="form-group" ng-class="{ 'has-error':   articleForm.title.$dirty && articleForm.title.$invalid }">
                <label class="control-label" for="title">Title</label>
                <div class="controls">
                    <input name="title" type="text" data-ng-model="title" id="title" class="form-control" placeholder="Title" required>
                </div>
            </div>
            <div class="form-group">
                <label class="control-label" for="content">Content</label>
                <div class="controls">
                    <textarea name="content" data-ng-model="content" id="content" class="form-control" cols="30" rows="10" placeholder="Content"></textarea>
                </div>
            </div>
            <div class="form-group">
                <label class="control-label" for="articleimage">Article Picture</label>
                <div class="controls">
                     <input id="articleimage" type="file" ng-file-select="" ng-model="picFile" name="file" accept="image/*" ng-file-change="generateThumb(picFile[0], $files)" required="">
                    <br/>
                    <img ng-show="picFile[0].dataUrl != null" ng-src="{{picFile[0].dataUrl}}" class="img-thumbnail" height="50" width="100">
                    <span class="progress" ng-show="picFile[0].progress >= 0">      
                        <div style="width:{{picFile[0].progress}}%" ng-bind="picFile[0].progress + '%'" class="ng-binding"></div>
                    </span> 
                    <span ng-show="picFile[0].result">Upload Successful</span>
                </div>
            </div>
            <div class="form-group">
                <input type="submit" class="btn btn-default" ng-disabled="!articleForm.$valid" ng-click="uploadPic(picFile)">
            </div> 
            <div data-ng-show="error" class="text-danger">
                <strong data-ng-bind="error"></strong>
            </div>
        </fieldset>
    </form>
</div>
</section>
view-article.client.view.html
update list view to include image
<img ng-src="data:image/jpeg;base64,{{article.image}}" id="photo-id" width="200" height="200"/>
list-articles.client.view.html
update view to include imgae
<img ng-src="data:image/jpeg;base64,{{article.image}}" id="photo-id" width="40" height="40"/>
article.server.model.js
Add image to database model
...
image: {
    type: String,
    default: ''
},
...
article.server.routes.js
Add new route for upload use connect-multiparty
...
multiparty = require('connect-multiparty'),
multipartyMiddleware = multiparty(),
...
app.route('/articleupload')
    .post(users.requiresLogin, multipartyMiddleware, articles.createWithUpload);
...
article.server.controller.js
Handle new route for upload require fs
...
fs = require('fs'),
...
/**
 * Create a article with Upload
 */
exports.createWithUpload = function(req, res) {
 var file = req.files.file;
 console.log(file.name);
 console.log(file.type);
 console.log(file.path);
 console.log(req.body.article);
var art = JSON.parse(req.body.article);
var article = new Article(art);
article.user = req.user;
fs.readFile(file.path, function (err,original_data) {
 if (err) {
      return res.status(400).send({
            message: errorHandler.getErrorMessage(err)
        });
  } 
    // save image in db as base64 encoded - this limits the image size
    // to there should be size checks here and in client
  var base64Image = original_data.toString('base64');
  fs.unlink(file.path, function (err) {
      if (err)
      { 
          console.log('failed to delete ' + file.path);
      }
      else{
        console.log('successfully deleted ' + file.path);
      }
  });
  article.image = base64Image;
  article.save(function(err) {
    if (err) {
        return res.status(400).send({
            message: errorHandler.getErrorMessage(err)
        });
    } else {
        res.json(article);
    }
  });
});
};
...