Well then Otto, you must have some sort of ‘LUCK” because I put a brand new install, on a brand new site on GoDaddy Linux hosting and the image uploading doesn’t work.
I’ve done nothing special to enable it, and just now, as I write this, am uploading 3 pictures to my own blog using GoDaddy’s Linux hosting.
I do have the special lines they want to enable PHP5 in my .htaccess (because one of my plugins needs PHP 5), but other than that, nothing special has been done to the installation.
If you post the specific issues you’re having, I’ll try to help you work through it, but it works on my own blog.
Additional: I have not tried it with their “economy” hosting, and I know it won’t work with their “free” hosting, but I use their “Deluxe” hosting package and it works perfectly there.