Well, after 5 hours of trouble shooting with both Verizon and Apple I have found out it was indeed the area I live in and the fact that Verizon is sharing with Alltel's towers. I live in a very rural area in southeastern Illinois. It was a pain in the ass going through everything to figure it out as well as restoring the iPhone which caused a lot of reconfiguring. I did find out that some of the techs at Apple dont have a clue about their own products...a couple of them were insisting that if WiFi is turned on I can't use either the phone or make or receive texts which is not true at all.
I had to drive about 18 miles to get into a Verizon service area to reactivate the phone...when I did this I tried to send the pictures in question and it did..not sure if the restore did this when I got back to my home I tried to send the pics and guess what, no go...it seems the stock camera app in the iPhone doesn't give you a way to change the file size of the pics taken and the stock size is close to 2mb which I guess is the reason I am not able to send these pics but was able to send a smaller size pic before the problem. The last tech I talked to said it "should" work and that Verizon will send out a new iPhone to see if it is the phone...which I think is nuts...and I don't want to take the chance of activating the new one, just to see if it is the phone or the area's towers and than have to go through any foreseeable problems in getting my old back the way it is again.
Then I had a arguement with the last Verizon tech about the iPhone and since there is no way to change the file size of the picture before or after taking it and that I need to take pics and send them through MMS that this wouldn't be the phone for me...since I got it in Feb the 14 day exchange program is moot. He said the coverage areaisn't a reason to return the iPhone however, Verizon knows where I live and the area's tower so it's on them...I guess I will have to accept the new phone, go through activating it with basics and then go drive again to see if it is indeed the present phone I have which I would be willing to bet my left ... it isn't!