Are you receiving an error message? Ideally, please disable the Flash uploader in your preferences and temporarily disable JS in your browser. Then go to upload the file; if there's a server error, it should print it.
That's not actually a PHP memory_limit issue. It's PHP being prevented from allocating memory, probably by some parent process controlling it. You'll need to remove the memory limit that's being applied there or you'll need to shrink the maximum size of image that can be resized (quite significantly with that limit, so ideally you'd want to remove the parent process memory limit).