It might not help everyone, but I suggest you try it if you have your site secured by a .htaccess
This what fixed my issue with http upload error.
mac osx 10.4.11 powerpc
using firefox 3.0.3
I had my domain protected with a .htaccess to protect it whilst developing - I turned this off when uploading images.
I had flash 10 installed - I installed flash 9
My image uploads then worked fine.
Hope it helps someone at least cos it did my nut in for ages!