It means your images are too big for your server's memory to resize. In the plugin's parameters, check the "advanced" slider section and look for the option "Memory limit (in MBs)". Set this value to 32 first. Save the plugin, clear your site's cache and re-try. If you get the error again, try raising the value to 64 (but no more). This way you're telling your server to raise the available memory limit for this process. Enforcing the memory limit may not work if your server is setup in such a way that prevents overriding default values. In that case, you either need to ask your hosting company to raise the "php memory limit" to 32M or 64M, or (if they decline or raise it to say 16M), try using images smaller in filesize.

The bigger the image is, the more memory it requires from the server to be resized.