[drupal-support] Image Size Limit?

I've just setup a default Drupal install along with the image module. The GD2 toolkit is installed and working properly. However, when I try to upload a jpg image into a gallery, I get a blank page, and I see this in my Apache log:

[client 127.0.0.1] PHP Fatal error: Allowed memory size of 8388608 bytes exhausted (tried to allocate 1980 bytes) in /var/www/html/drupal/includes/image.inc on line 221, referer: http://localhost/drupal/?q=node/add/image

What does this mean? The jpg is only 160 KB and the site itself is only taking up about 3 MB. How could this exced an 8 MB limit, and where is this limit set?

Any help is appreciated.

Thanks, Chris