I) Your carrier has an MMS send size limt, you must be UNDER this limit in order to send an MMS without it failing.
II) Handcent Next SMS will automatically resize pics and videos based on Handcent Next SMS Settings > All >Send Message Settings > Maximum MMS size
So all you need to do is find out what maximum size your carrier supports then you are done!
If you set the Carrier Send Limit too large the MMS will fail to send. Typically 1Mb is fine.
Send yourself a picture (MMS) and report back what happens please.