WordPress automatic plug-in upgrade "breaks" FTP permissions

Our ISP moved our site to a new server on 6 March, after the move we could no longer upload photos and our grand flash album galleries, although working fine on top-level site http://www.peteranne.it (at which level the photos are stored, eg path to album /peteranne.it/wp-content/flagallery/photos-for-web-site) didn’t work on daughter sites peteranne.it/it/ and peteranne.it/de/ when called by this code
<iframe src=” http://www.peteranne.it/wp-content/plugins/flash-album-gallery/facebook.php?i=19&#8243; scrolling=”no” width=”600″ height=”250″></iframe>.

We suspected permissions problem, opened assistance ticket and it got fixed.

On 19 March we updated Grand Flash plug in automatically, funny, it didn’t automatically re-enable itself, and we were back to the state after the move, and had to open an assistance ticket again.

Question: how exactly should be set FTP permissions to avoid this happening? Our ISP insists this is a WP error “These problems are caused when you access by FTP to modify your site. After you have made changes, you should use your webcontrol FTP panel and “Repair Permissions” (me: the buttons to do this do not show up on the web control panel, this is the subject of an assistance ticket). ISP continues:”This is so as to avoid problems related to permissions which block some areas of the site and stop you making modifications. This has nothing to do with our server but with your CMS (WP) which assigns incorrectly permissions.”

Specifically:-
1. On previous server automatic update of plugins and WP worked fine. Should I no longer use it if our new server has “tougher” permissions rules?
2. Assuming I can one day modify permissions, how should I set them to avoid this problem. I read eg http://wordpress.org/support/topic/while-updating-plugin?replies=4 and this is quite close to my case.

thanks Peter