Wordpress 2.6 Uploading Broken Images - Fix
If you have just upgraded to Wordpress 2.6 you might notice one slight problem. You are no longer able to upload your images. They show up as broken images. It doesn’t matter whether you use the AJAX option or not, the result is the same.
Surprisingly not everyone is facing this problem.
A client of mine has the exact same configuration on his blog (give or take a couple of plugins) as mine. However, he faced the broken image problem while I did not. Of course we have blogs on different servers so that might have something to do with it.

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