Since Titanium is not exporting the UIImageJPEGRepresentation function present in the iPhone SDK, there finally was a reason for me to write a little Titanium Module to do that myself. It is quite easy just define the desired size and pass the picture as a TiBlob, it is compressed as close as possible to the desired size and returned. Example usage is present in the app.js used for testing in the Project.
Enjoy.
Code from the sideline 