The reason why you are unable to upgrade Gravity Forms using the automatic upgrade feature is because you are running an old version of Gravity Forms (v1.3.9) on a WordPress 3.0+ site.
Gravity Forms released an update before WordPress 3.0 was released to fix a compatibility issue with the WordPress 3.0 automatic upgrade system. WordPress changed the hooks available to do upgrades and older versions of Gravity Forms were not compatible.
Because you did not keep your Gravity Forms plugin up to date when we released updates, the version you are running is not compatible with the 3.0.1 automatic upgrade functionality.
You will have to upgrade manually by registering and logging in at the support site here: http://www.gravityhelp.com using the same PayPal email address you used to purchase Gravity Forms. You can then download the latest version of the plugin and install/upgrade manually.
I would upgrade to the latest version and then test to see if you still experience a conflict with the Multiple Galleries plugin.