Allowing Users to Upload via the WordPress 2.6 Media Uploader:
You have to chmod wp-content/uploads/ to 777 in order for the Media Uploader to allow users to upload files. With the websites that I host, I prefer to not have anything chmod’ed to 777 unless it is extremely inconvenient, so I just create folders every few months and chmod them to 777. I go into /wp-content/uploads/THE_YEAR/ and do a mkdir 08 (or whatever the current month is) and then chmod 777 08 for the month, and I chmod previous months back to 755. The alternative would be to chmod the entire uploads directory, but then all prior uploads would be at risk of tampering.