This hindrance actually makes sense for 3G. Many users could accidentally burn through their data caps by uploading 720p clips. But iOS 4 holds the same restrictions for Wi-Fi uploading as well — which is flat-out silly.
Pixelpipe is a free app that will upload your videos and pictures in full resolution to "over 100 supported destinations". Pretty much any social networking bloggish overshare service you could possibly use looks to be compatible. And you can even upload your files in the background while you check your email or something.
Steve Jobs has said (in one of those fan email conversations) that the iPhone would get "over the air" uploads in "the future". But for those who'd prefer that the future come today, Pixelpipe sounds like a solid solution, even if we hear that the app is still ironing out a few bugs.