Hi Tom,
If you are in a unix environment, php.ini is usually right under the /etc directory:
/etc/php.ini
On a Windows machine, you can do a file search for it.
Once you find php.ini, look in it for a section that is something like this:
<snip>
;;;;;;;;;;;;;;;;
; File Uploads ;
;;;;;;;;;;;;;;;;
; Whether to allow HTTP file uploads.
file_uploads = On
; Temporary directory for HTTP uploaded files (will use system default if not
; specified).
;upload_tmp_dir =
; Maximum allowed size for uploaded files.
upload_max_filesize = 2M
<snip>
Change the upload_max_filesize to the size you want, save the file, and restart you web
server. You can then change the settings in the Admin section of your Moodle installation.