I used to use Photobucket but earlier on in the year they decided they wanted to charge for the priveledge, now I use Imgur. Simpler and faster than Photobucket, and it's free.
I had the same issue trying to upload photos from my iPhone last week, the photos were too big for the server.
I found an easy way around it. From
My phone I emailed the photos to myself and had the option to reduce the file size when selecting the photos. Then I just saved and uploaded these smaller sized files and it worked fine.