Hi Eric,
Just to add. This problem doesn't seem to be happening on all machines. On a windows machine (running windows 7), we are getting the normal error using the oversized file, and if I remove your script, I get the original PHPFileUpload oversized friendly error message. This is in IE, FF, Chrome and Opera.
So far this problem then seems to be limited to OSX and Safari/FF. I will try some other browser types on the Mac tomorrow.
Thanks.