Upgrade to 3.8 – cannot upload media (greyed out) – set featured image

  • I upgraded to 3.8, I cannt now upload media into the media library.
    It look slike it is uploading but then when it has finished, the image just appears grey.

    I am using Servage not GoDaddy, it seems to be the same problem as many other users are having.
    Any ideas what to do?

    I have tried:
    1/ deactivating all plugins
    2/ switching to the Twenty Eleven theme but same problem
    3/ resetting the plugins folder by FTP

    Something must have changed in WordPress

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