Ok, so HostforWeb said that the 2 Megabyte barrier is on their side and they changed that to 10 megabytes. Great. Now, about music not being saved they wrote this:

"The upload script is sending data to the server but for some reason the media files are not getting saved. I've double checked your file/directory permissions and they match Boonex's instructions.

I'd recommend contacting Boonex directly as this issue appears to be in the Dolphin script itself."

Any ideas anyone?