'The GIMP' is an excellent image manipulating program and it has a really neat feature that can help getting your pictures below 125k. Once GIMP has started, open the picture then right-click on the image and choose Image, Resize. 640x480 or 480x640 seems about the biggest image you'll get in 125k. However, the image may still be over 125k even now. No problem. Right-click again and choose File, Save as and give the image a new name remembering to put .jpg or .jpeg on the end. A window will then come up with a 'preview' option and the ability to choose the JPEG compression level. If you tick the preview box as you change the compression level you will see the size of the image in kilobytes change. This allows you to fine tune the compression level and still get it just under the 125k limit.
Available for all popular operating system like Windows, Mac and Linux here:
http://www.gimp.org/
What I'm not sure about, is 125k=125000 bytes or 125*1024=128000 bytes?