@leszekmp
There are countless number of reasons that can cause this error to show up; which is why it is so easy to find so many occurrences of the problem on the internet. And in the case of the original poster, it sounded like it was because of the upgrade that caused the problem. And in fact earlier today a customer reported the same problem it was because their server permissions got reset during an upgrade to WP 2.8 which caused all image uploads to fail.
I realize that is not the reason everyone has this problem.
And it indeed sounds like you are having a different issue. I will gladly take a look at your log file to help diagnosis the problem if you send it to wlw-team@microsoft.com
-Brandon Turner [MSFT]