There are a number of things to try, depending on exactly what you are trying to do and what handset you want your application to run on.
If your image is packaged inside your MIDlet JAR file, You have less control over what the MIDP runtime does because the data needs to be unzipped before it can be loaded as an Image. In that case, I would suggest simply packaging a smaller image. Either reduce the number of pixels or the number of bytes used to encode each pixel.
If you can read the image bytes from a GCF-based InputStream (file, network...), You need to understand the image format (BMP is straightforward, JPEG less so...) so you can scale it down into a mutable Image
object that would take less memory, one chunk at a time.
In that case, you also need to decide what your scaling algorithm should be. Turning 32 bits pixels in a file into 8 bits pixels in memory might not actually work as expected if the LCDUI implementation on your mobile phone was badly written.
Depending on the content of the image, simply removing half of the pixel columns and half of the pixel lines may be either exactly what you need or way too naive an approach. You may want to look at existing image scaling algorithms and write one into your application.
Remember that basic LCDUI may not be the only way to display an image on the screen. JSR-184, JSR-239, JSR-226 and eSWT could all allow you to do that in a way that may be totally independant from your handset LCDUI implementation.
Finally, let's face it, if your phone MIDP runtime doesn't allow you to create at least 2 images the size of your screen at full color depth at the same time, then it might be time to decide to not support that specific handset.