Not able to upload pix

I recently transferred a site from one server to another. It was actually set up in a folder on a different domain then transferred to its permanent home. Now when creating a new page or post and trying to upload a picture I get an error “you do not have access…”.

Is this simply a folder permission issue or is wordpress looking at the wrong folder? I don’t want to open up permissions on the “uploads” folder and open myself up to potential problems. Has anyone had this problem and how do I fix it?