I've been having a lot of problems with "Permission denied" issues when uploading pictures or auto-thumbnailing.
Here are two threads that will help you out...
http://4homepages.de/forum/viewtopic.php?t=3383
http://4homepages.de/forum/viewtopic.php?t=6389 (Actually, point #1 in vividviews' post is incorrect. I usually have to delete the directory 4Images creates for my new category and recreate an identical one using FTP).
Cheers,
Lawrence