I am having the same problem. The vertical picture is uploaded and saved correctly, but when I upload it to the site, the vertical picture is only showing up horizontal.
You can use picnik but if you are not a paid member you can only do the minimal things on there. You should have some sort of photo shop on your computer if its not an older version to edit them. I use the windows live to edit some
Or tilt your head, that makes it as good as done.