Thought of that, but I've tried many images and none are showing anything weird in Photoshop, all valid image files, not truncated or anything strange.
I've also reinstalled the extension, redone the file from scratch (just a simple form with the file field and a text field that inserts into the database), had sipp on it also but took that off to diagnose, it has me stumped.
Is dpi an issue? These will generally be pics straight out of a digital camera which these days often start at 240dpi, but I can't imagine why that would be an issue with the upload. If it was affecting sipp (I'll get to that once I solve this) I could understand, but it's just uploading a file.
My users aren't very tech savvy so to ask them to alter the file in any way is out of the question.
I had a chat with my host, the costume php.ini on my service (they still don't know why) hasn't taken effect. They've made the changes to the default setup server wide for now and everything now works as it should - uploading 10MB with ease.
If anyone in Australia is looking, aussiehost.com - great support, great host.