I don't know why it does it, but it happens to me too.
I have an account at snapfish for most pictures, but I also have one at www.dazzle.com for animations and pics with small resolution.
But sometimes dazzle won't upload the full animation for me...I haven't had any problems with the small pictures though.
They host avatars and they're small! I've never had any trouble with any size pic with them. They also let you post the great big pics and don't shrink them down like snapfish.