My app uses an image 4000×2828 pixels, about 2.9 MB compressed.
It runs fine on iPhone 4S iOS 5, but silently stops working on iPhone 3G iOS 4.2.
The app runs fine if I change the image to another one 501×501 pixels, about 900 kB compressed.
Is there a maximum image size or memory limit on iPhone 3G or iOS 4.2 I should know of?
iPhone 3G has supposedly 128 MB of working RAM; that size of image takes about 34 MB uncompressed (it has to be handled uncompressed). So, while I can’t tell you the maximum image size, you could make a test program generating bigger images (start in increments of 100 px) until you get the error.
Edit: you may want to have a look at this thread for a possible work-around.