Here is my test code. "foo.png" is a 323KB file in the cwd.

#!/usr/bin/perl -w

use strict;
use Net::Twitter;

$\ = "\n";

my $img = "foo.png";

# Translate image to a raw format
my $raw = do {
   open ( my $fh, '<:raw:perlio', $img )
      or die "Can't open image file $img: $!";
   local $/;
   <$fh>;
};

# Create a connection to twitter
my $twit = Net::Twitter->new( { 
                username => "fake_uid",
                password => "fake_pwd",
                } );

# Post the image file
$twit->update_profile_image( $raw );

# Grab the error hash ref and roll through it
my $err = $twit->get_error;

foreach my $key ( sort keys %{ $err } ) {
    print STDERR "$key => $err->{ $key }";
}
[download]

And the dump of the $err hash ref:

error => There was a problem with your picture. Probably too big.
request => /account/update_profile_image.json
[download]

The "probably too big" is not a very good error message, is it? :) I also tried it with a 5px x 5px file and it spat out the same error. As I said earlier, the connection to twitter is working, because I can successfully post using the update() method.