@Exchange?: Being the one who would have to manage 2mb photos being replicated to remote sites over $30,000 128k satalite links, I am extraordinarily grateful for the size limits. This is indeed a thumbnail. Links to full pictures can be stored in any number of other locations. You do not want a large picture replicating to every DC in an enterprise. I'm sure your SMB can continue to work just fine on Google AppX, but the MS has actually through this one through on something more than just a micro scale, which is the way you are thinking.
Think globally, and you will quickly see that size limitations are important.
P.S. Let me know how your offline access to GMail contact pictures are working for you.