This site is hosted on 1&1 which evidently has a 40M memory limit on shared hosting. From their FAQ:
"Due to resource limits on our Shared Hosting machines, it is not possible to allocate more than 40M of memory to PHP, although phpinfo() may report a higher number. You will be unable to increase the memory usage limit with a php.ini file."
Looks like I'll just have to inform my client to resize their own images.
Thanks - Joe