When large images are added to a new item creation, the creation of the record times out because it is taking too long to resize the image. The images get resized to 200 pixel width with fixed ratio, so if you are using a photo from your camera that is 2 MB or larger, or over 1000 px wide, this is going to happen. Resize your images to be closer to the 200 px width and you won't have any problem creating entries with pictures.
I set my export settings to JPEG 100% quality, and on average I'd say my widths are around 500 px.