I'm also getting this problem. It worked fine when I installed, but recently it stopped working.

I've checked permission on the uploads folder is 777.

My FTP client (FileZilla) allows me to rename files so I assume this is still enabled.

I am hosted with supanames.

hkats, if the PHP.INI file is set up incorrectly, how do I find out?

Also, where you say a temp file or tmp, do you mean file or folder. I've tried creating both temp and tmp as files and folders, but no joy.

Any help would be much appreciated.