Photos all resized to 320x240 pixels despite selecting "large"

I have an issue with Apple Mail where all photos attached to an email (either by clicking "email" in iPhoto, or dragging the photo onto a new email message window) automatically resize to 320x240 pixels.

Changing the "size" dropdown at the bottom of the compose window has no effect.

The photos are of a large resolution before being attached to an email. For some reason this has only just started happening and was not happening 12 hours ago. I have not installed any new software or updated any software during this time.

Any suggestions most appreciated!