Here come all the dumb comments... people still use MMS? Come on man. No way you don't. Wtf? Yes we know we have f*ing Gmail MMS is more convenient for people.
I'm not the one you're responding to, but I don't use MMS. I had it, and SMS, 100% turned off and blocked on most of my phones. It's a rip-off fee for those services, but I have alternatives. YMMV on that.
Gmail for pics, but it took a long time to train my friends to use it instead of sending an MMS and *****ing that I didn't get it.
I am a Google Voice user for a year or so, and it's the only number I give to people. GV doesn't accept MMS, so I've been without for a while, and the SMS service on it is free and goes over your data, not your voice/sms channel on the phone.
I think this is one area (actually there are several) where Jobs was right (MMS should go away and be replaced by email), but we're years away from that, it's such an embedded part of feature phone culture these days.
I picked up a Nexus S on Thursday morning, and even though my T-Mo account does have MMS (part of the package I have), I haven't used it or even tested it (because of the above). Personally I am sure that either T-Mo or Google will fix this very quickly, whoever's end the problem is actually on.
Would one of the alternate MMS packages in the market (like Handcent) handle this differently? Probably not, they're just front-ends to the messaging service, but couldn't hurt to try.