I am having same problem.
NextGen Gallery 1.8.1
I thought maybe it was problem with NextGen upgrade and went back
to 1.8.0. It didn't get error on first upload after that, then it went back to being bad boy again. Also it seems kind of random -- sometimes after the error, the images are listed and show placeholders in page, but don't display, need a "recover" and they show up. Other times, nothing at all.
Am also getting out-of-memory error when trying to add a folder of images on the server.
Everything was working beautifully yesterday.
Any clues or urls would be great. I have searched google, nextgen forums and wordpress and not finding anything so far. Have enabled error display and log to catch everything i can.
Don't even know if it is trying to write to the standard server /tmp folder or some NextGen-specific folder.