No, the 127GB represents the maximum size drive for a DMS that does not use the LBA version of linux.
The DMS tools will determine the size of drive being used and install the appropriate version of this file for your drive. I believe in theory *ANY* drive can use the LBA version, it's just I don't think anyone has actually tried it as it's only really necessary for drives > 127GB.
Some 250GB drives show problems with PhatNoise Media Manager due to the way they access/transfer data to the drives, but 250GB so far is the maximum tested and shown to be working in the PhatBox.