images not uploading to upload folder

My version of wordpress (2.6.1) doesn’t seem to be able to create an uploads folder. I created that folder myself but now when uploading an image, it doesn’t get put in the uploads folder – I have to move it manually into the upload folder. Anyone know what’s wrong and how to fix it. I looked around at similar issues and have disabled php safe mode, and have set the correct permissions on the upload folder and others, but for some reason it just won’t upload to the uploads folder.

All help is greatly appreciated.

PS: This is happening when I attempt to post an image into a page, not a blog post.