From the arXiv news at arxiv.org/new:
Increased Size Limits: The automatic size limits have been significantly increased for all areas. They will now affect only a tiny fraction of submitters (<0.1%).
Good news for anybody who has spent weeks trying to cram one of the monstrous figures generated by the horribly broken rendering algorithms of Mathematica 6 into the 1 MB previously allowed for an arXiv submission (I have actually had to reinstall Mathematica 5.2 to get usable figures).