The substantial difference in file size depends not only on the format of the embedded images, but also on the structure and compression of the two formats. The old .doc format is very complex and verbose; I’m not sure, but I think it does not even compress the text. The newer .docx format is a compressed archive with the text, styles, configuration and embedded images kept in seperate files inside the archive. The old .doc format was never efficient and nowadays it should just be avoided whenever possible. The .docx format is, in the opinion of many developers and standards advocates, also very bad, but if you must use it for exchange or compatibility, it’s always better than the old one.
At the end of the day, OpenDocument (.odt) is the better format ;-).