I started getting the “Unable to create directory /wp-content/uploads/2008/12. Is its parent directory writable by the server?” error when uploading or inserting image into a WordPress post just after upgrading to WordPress 2.7. First I thought it is a directory permission related error so I tried changing the permission of my ‘upload’ directory to 777 but I was still having the same problem. After trying many things I was able to fix it using the following method.
1. Log into your WordPress Admin account.
2. Go to ‘Miscellaneous’ Settings options from the ‘Settings’ menu.
3. In the Miscellaneous Settings put
wp-content/uploads
in the “Store uploads in this folder” text box.
4. Save the Changes by hitting the “Save Changes” button and you are done.
