Most likely, the upload is taking so long to transfer, IIS times-out.
Google "Large File Upload Timeout ASP.Net"
This is the first one I get: http://weblogs.asp.net/mhawley/archive/2004/05/11/129824.aspx has some good info.
I have an HTTPHandler that solved this issue for .Net 1.1, however I've not yet updated for .Net 2.0. I might not, as there are some other options available, which I have yet to fully explore:
I've seen several Flash upload controls which might solve this IIS issue.
I've seen at least 2 tutorials on making upload controls in Silverlight.
There are dozens of commmercial products available to handle this as well.
I do not know why, after all these years, Microsoft has yet to add something to IIS or .Net to handle this (Unless there is something I'm no read-up-on?).