The reason for this is probably because the internal HttpHandler cannot process properly the incoming data for some reason - for example if the binary data is too big to be passed as a single request or the image format is not handled properly. You should check whether you have any restrictions on the size of the transferred data.
Hope this helps.
the Telerik team
Register for the Q2 2011 What's New Webinar Week. Mark your calendar for the week starting July 18th and book your seat for a walk through of all the exciting stuff we will ship with the new release!