Setting a SendTimeout on the client-side binding should fix the problem, although it looks like the ServiceReferences.ClientConfig isn't correct, so is probably being ignored. There's a sample ClientConfig in the Deployment\Snippets\Silverlight section of the Learning Resources, but here's one too -
<configuration>
<system.serviceModel>
<client>
<endpoint name="EntityService"
address="
http://localhost:9009/EntityService.svc"
binding="customBinding" bindingConfiguration="customBinaryBinding"
contract="IdeaBlade.EntityModel.IEntityServiceContractAsync"
/>
<endpoint name="EntityServer"
address="
http://localhost:9009/EntityServer.svc"
binding="customBinding" bindingConfiguration="customBinaryBinding"
contract="IdeaBlade.EntityModel.IEntityServerContractAsync"
/>
</client>
<bindings>
<customBinding>
<binding name="customBinaryBinding" sendTimeout="00:20:00">
<binaryMessageEncoding/>
<httpTransport maxReceivedMessageSize="2147483647" maxBufferSize="2147483647" />
</binding>
</customBinding>
</bindings>
</system.serviceModel>
</configuration>