1. Set upload_max_filesize and post_max_size to an arbitrary value, e.g.1GB
2. Set course "Maximum Upload Size" to the server limit (1GB)
3. Revisit course settings page and 1GB is shown in drop down box as current setting
4. Increate upload_max_filesize and post_max_size to 1.5GB and restart web server
5. Revisit course settings page and 1.5GB is shown in drop down box
6. Upload a file > 1GB and < 1.5GB. The upload will fail
7. Revisit course settings page, and click save
8. Upload a file > 1GB and < 1.5GB. The upload will succeed.

It seems as if the "Maximum Upload Size" setting as displayed in the drop down box is pulled from the servers max limit, and not the actual value stored in the database from the last time the value was saved.