I wrote to the maker of my Twitter app (Kiwi) and told them that I have problems posting pictures. They replied that Twitter recently has dramatically reduced the "rate limit" for all twitter apps, and it's creating many problems (like user lookups) which it's hard to do anything about.
For me, it helps to post pictures to my own server (or DropBox), and then just post the link with a tweet. (Only thing is I think those posted on Twitpic is available to more people, but I'm not sure.)
But in the bigger picture, it shows the potential problem with all free services: it attracts millions of people, but 'who you gonna call' when the caca hits the fan? What are you gonna demand, your money back?