All sorted now, after you guys pointed out that the max upload was set to 8mb (although it is set in the php.ini to be higher than that) I did some researching (perhaps more so soul searching :-)).
For some reason, completely separate to wpmudev, the php.ini file was not loaded. I now inserted the values in .htaccess and pronto... all works now.
Thanks so much for the great support.... you guys ROCK.
Nope spoke to soon:
"Warning: Invalid argument supplied for foreach() in /home/dayboro/public_html/wp-content/plugins/wp-hummingbird/helpers/wp-hummingbird-helpers-modules.php on line 62"
I enabled support for you guys.