Yeah, the thing that broke means that all uploads-from-file are broken, not just uploads-from-file that need to be resized! (Think of it like, all uploads-from-file can't proceed until they hear back from the thing that resizes icons with confirmation that the icon is an acceptable size, and the thing that resizes icons isn't answering the phone at the moment.)

PS: our icon size limit is 60kb, not 40kb -- we changed it a while back!