Fatal error: Out of memory (allocated 42205184) (tried to allocate 3072 bytes) in /home/morriswt/public_html/wp-admin/includes/image.php on line 147
My hosting provider already has the PHP memory limit set to 64MB.
Given the error message, I'd say that your hosting provider actually set the PHP memory limit to 40 MB, not 64 MB. See the "allocated 42..." message?
Short of it is that you either a) need more memory or b) need to reduce the amount of memory you're using. You can do A by getting the hosting provider to up the limit, or B by removing plugins and other things taking up all that memory. A default WordPress 2.8 install fits into 32 MB of memory on almost all hosts (except for one special case that is fixed in 2.8.1, and which does not apply here).
Also, uploading images and creating thumbnails from them takes *loads* of memory, just to read in the full image. If you resize your image to web sizes before uploading it (instead of uploading the full sized camera image), then it will take much less memory. Rule of thumb: megapixels = megabytes. An 8 megapixel image requires at least 8 megabytes of additional memory just to read it in and process it.