It SHOULD be responding with an error message explaining that, but I think what is actually happening is that it's running out of memory and completely aborting itself, which means the error message can't actually output to the page. That's kind of wank, but at least it's not a COMMON occurrence.
I'm not going to guarantee that I ever get around to finding a better way to die gracefully on that - the fanart system gets so little use and I have so many things to deal with on the site that it's going to be low on the priority list. What I can do is try to make better messaging for users before they start to be careful about what they submit.
In the case of your image, you scanned it in at 300 DPI and the image was a full-size sheet of paper. The result was an image 2550x3300, which, while great for printing, isn't terribly useful for an online gallery.
I would suggest either rescanning it at a lower DPI, like 72 or 96, as most users who use CoN use it on standard monitors. If you really want to keep the high DPI (a lot of mobile products use higher DPI), I would still consider making the image smaller in terms of raw pixels to see if that helps - it did for me, I was able to submit your art on the CoN development server when I reduced it to 72 DPI and about 700px wide. If it still fails then, I'll have another look.
If you've got any further questions, let me know, and I'll try to fix the real source of the error sometime if time allows me. Thanks!