Uploading large files is maxed by PHP AND how much your ISP will allow you to upload.
Personally, I'd give them FTP rights to a common folder, then when they go to connect, they can get to that folder and create one for themselves. That would be the simple thing to do.
As for uploading through PHP, it's limited. You can set PHP to handle a Gigabyte of information, but if your ISP will only allow you to send 2 megs, you'll only send 2 megs of that file. That's why some movies, if you download them, come in a zip format in sizes of 1.44 MB (the old Floppy Disk standard). The upload size is small, so they have to break it up.
~Brett