Ditto to the above really, tried the code posted and it didn’t seem to make any difference, tried changing a few other mentions of 128 in the code but again it didn’t seem to make a difference. I think there must be something deep down in the upload code that makes the thumbnail 128 wide early on, and I decided not to spend hours and hours on it.
Anyway, downloaded the plugin linked to above and it seems to have done the job, and added a few more options too that I would never have coded myself.