Unable to create directory<DIRECTORY NAME> . Is its parent directory writable by the server?
This error seem familiar to you? I got this error when trying to upload an image on wordpress. I checked the directory mentioned in the error and it did not exist. It so happened that Dreamhost had moved the my blog to another server. Wordpress was trying to save the image to a location that existed in the old server. I went to Settings -> Media Settings -> Uploading Files and then changed the "Store Uploads in this folder" setting to "wp-content/uploads". Before the changed it pointed to the directory in my old server. This change fixed the problems with uploading files.