As far as I can deduce from the code this config setting is no longer used (as other upload config settings). I do not know the reason for it.
In module_upload you can see that the max size of the server is used. Although that is changeable http://www.php.net/manual/en/ini.core.php#ini.upload-max-filesize
I guess you have to ask your provider.
You could reason that if you set a size that's lower than the server size that size should be used. But as I said I do not know why several upload settings are no longer used.
Quality is in the detail of things............