was this ever resolved?
I have the same issue, permissions are set to 777 on the blogs.dir folder and all folders above it, but no media uploads are possible (also having problems with plugin upload via wp however uploads via ftp is fine)
message is:
“Screen shot 2011-04-04 at 18.31.52.png” has failed to upload due to an error. Unable to create directory ../wp-content/blogs.dir/2/files. Is its parent directory writable by the server?
(it is writeable…)
