Automatic upgrade bug?

– Saw the message: “WordPress 2.7.1 is available! Please update now.”
– Clicked on link
– I decided that I needed to do a backup first and not to proceed for now with the upgrade, so clicked back to site –> empty screen!!!
– Went into /wp-admin, checked Plugins –> none!! (should be 4)

– Panic, breathe deeply and slowly

– Proceed with automatic upgrade –> lots of “permission denied” errors
– CHMOD WP-CONTENT to 777
– Proceed with automatic upgrade –> runs “forever”

– Got tired of waiting, check Plugins –> all back, but deactivated
– Reactivate Plugins, CHMOD WP-CONTENT back to 755, verify site –> seems OK.

Questions:
1. Is the automatic upgrade messing with the permission???
2. What are the recommended file permissions for the various folders and files in WP?

Thanks!