The original limit was actually 150MB. How do you know that you don't have 1GB of online storage capacity?
Good catch, when the OP said 250, I was thinking 250 which is why I put it in my post. I am sure the OP must have the 1GB though, as I do know it changes once it`s opened for the first time. I remember when it was first upgraded many people complained about it not going to 1GB, until they found out it will only show the change once the actually folder is opened.