For the sake of Future Reference, here is my 2 cents worth of information on this topic which worked for me:
Running Moodle on a Shared Host server
1- Upload Large Files into Moodle
2- Unzipping Large Files after upload into Moodle on the shared host server
Solution to Challenge # 1:
Many shared host servers limit you to 10 MB file size upload. To bypass this issue, you must modify your PHP.ini file by changing these parameters:
upload_max_filesize = 100M
post_max_size = 100M
max_execution_time = 600
max_input_time = 600
memory_limit = 100M
This should solve your first problem.
Solution to Challenge # 2:
As Amy Goshek responded to this issue for me, all you have to do is: "In the admin block for your install, go to Server > System Paths. The paths for zip and unzip respectively should be: /usr/bin/zip and /usr/bin/unzip."
The above helped resolve my problems as it related to the File size upload & unzipping on the shared host server. I hope that it will help resolve yours.
Best of Luck,
(Edited by Dan Marsden -remove bad MS Word copy/paste stuff- original submission Monday, 30 March 2009, 04:43 PM)