Check your config.php file for the following lines:
PHP Code:
// Image Processing Options
// Images that exceed either dimension below will not be resized by vBulletin. If you need to resize larger images, alter these settings.
$config['Misc']['maxwidth'] = 2592;
$config['Misc']['maxheight'] = 1944;
If you do not have GD or ImageMagick installed, then the server will also not be able to resize any images. Also make sure you have set reasonable dimensions for the Attachment type.