sudo vi /etc/trac/trac.ini
Updated the attachment max size line to this:
[attachment]max_size = 5242880
This made it 5 MB (I just multiplied their number of bytes, which equaled 250Kb, by 20).
http://trac.edgewall.org/wiki/0.11/TracIni
Not as easy as one would hope-- make a new larger disk image, and copy contents to it.