I am having this same issue at the moment. I don't know if it's related to the DNS general flakiness or not. I'm using a very simple piece of code (essentially copy($pic_name, $dest) to upload pictures to my site.
I'm a web developer and I'm currently using this exact piece of code (successfully) on at least 2 other sites.
Support has said they don't troubleshoot third party software (since when does one line of simple code constitute "third party"?) and recommended I try here for a solution. I'm trying to launch a client web site, so as much as I don't know if it will help, I'm posting.
I did research the wiki and the Knowledge Base, and I've had an issue before where even if the file is in the right place, open_basedir will act flaky and not allow you to upload the file. I'm running PHP 4.0 as a CGI.
Any advice on this would be welcome, I'm getting very frustrated at this point.