Installing Update

Try changing the permissions on the wp-content directory to 766. If you still have problems, try 767, 775 or 777. Once your uploads are working, change the permissions on wp-content back to 755 again and check that everything still works OK.
http://codex.ww.wp.xz.cn/Changing_File_Permissions

It’s a server issue, so all I can suggest is that you try upgrading manually.

cybersmart.co.za
Is there something they should be doing on their side? Changing ftp user names? I have spent hours with this. If I upgrade manually, do I have to do it with every upgrade? What if I deleted the whole site and started again?