[Joe2288]

Ok, I checked a little further into this problem. It does have something to do with permissions.
Folder /backups/ permission is 0777 owner me
Folder /backups/2009-09-17 permission 0777 owner www-data ... does this matter?

So I went on and edited mysqlbackup.php in order to remove the creation of folder as this is somehow creating the problem for me ....

// Cron Based Automated Backup
function cronBackup()
{
/*
Set Full Dump Path.
*/
//$this->FULL_PATH = $this->DUMP_PATH.$this->DATE.'/'.$this->PREFIX.$this->DATE;
$this->FULL_PATH = $this->DUMP_PATH.'/'.$this->PREFIX.$this->DATE;

/* Short Path */

//$this->SHORT_PATH = $this->DUMP_PATH.$this->DATE;
$this->SHORT_PATH = $this->DUMP_PATH;

/*
Close Forum.
*/
if ($this->SHUTDOWN) { $this->forumStatus(0); }

/*
Remove previous SQL Files.
*/
//$this->removeDir($this->SHORT_PATH);
//$this->createDir($this->SHORT_PATH);

/* Clear Cache */
clearstatcache();
..............
............

I no longer have dated folders, but it is working now.