Based upon your description, if something works in php 5.3, and under the same exact settings does not work under php 5.4, it does sound like it is a problem with php 5.4.
Before we begin to investigate this further, I'd first like to review your PHP memory settings to ensure they are appropriate for what it is you're trying to do.
Based upon your error message, it appears that you were trying to use over 2GB of memory when your php setup was only allowing 256MB.
How large is the image that you are trying to upload?
(You can post more information in the comments at the bottom of this page)
Based upon the size of the image that you'll be uploading, we'll want to make sure that your php memory_limit is set appropriately in your php.ini file.
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