Innocuous error while uploading theme | The uploaded file could not be moved to

I am building a child theme and have a sandbox for testing here: http://shalaco.com/createpeaceproject/ with the admin files living in /secrethatch/

I installed the parent theme as usual, but when I went to upload the zip for the child theme I got this innocuous error:

The uploaded file could not be moved to /mnt/stor1-wc1-dfw1/380423/452859/www.shalaco.com/web/content/createpeaceproject/secrethatch/wp-content/uploads/2011/01.

I will fix this by manually ftping the files but… what gives? Why does WP want to put this file in the uploads folder and whats with all the weird subdirectories? IE: /mnt/stor1-wc1-dfw1/380423/452859/