Try disabling your plugins and then see if you still have this problem.
Note: To temporarily disable the plugin system, edit config.php and add this line right under <?php
PHP Code:
define('DISABLE_HOOKS', true);
It could be that a plugin you have installed is interferring in your upload, so try disabling them as I wrote above.
Also, doyou have a test account on your site where we can try this out?