I recommend to avoid iTunes for syncing photos,
Download the Dropbox app for you PC. Drag the photos from your SD card, to the Dropbox folder you downloaded to your PC.
Now on your iPhone, download the Dropbox app for iOS from the AppStore.
Open it, sign in.....all your pictures are there.
A Dropbox account is free and gives you 2GB of space to store your photos (and anything else).
If that is not enough space.....there are other applications that do that same exact thing with more free space.
Can alway buy more space too.