I am facing the same problem with EUKHOST.com, the file ‘uploads’ fine but then does not show up in the preview area. This problem has only surfaced in the last 3-4 days. I haven’t changed any code which leads me to believe it is something to do with their hosting...I will be requesting a log of what changes they have made to their config in the last 3-4 days..
EDIT: I have resolved this problem, my host changed the ownership of the files and directories from Nobody to <cpanel username> and images are now uploaded every time…
EDIT2: It is broken again, no idea what to do now....I have tried a clean install which leads to the same thing…
I could solve it. A little bit. I took all the code and database, made not a single change in the files (except local.xml for database settings) and copied it to another server. Now image upload worked out of the box. I will now compare the phpinfo() of both to see a difference.