I've been reading through the forums trying to resolve what appears to be a common problem with photo uploads.
I'm running the latest version, 3.8, and using Arras theme.
When I (Administrator) or others (Editor or Author) try to upload photos we're seeing, "An error occurred in the upload. Please try again later."
If one closes the window, saves a draft, then returns to the media insertion, the photo appears seems to be successfully uploaded and is usable.
I've tried disabling all plugins, switching to a simple theme, like twentytwelve, but it still gave same errors on upload.
This issue has been around for a long time, and sometimes disappears. At one point I thought it was a folder permissions issue, and it seemed to get resolved by making sure they were set to the correct user. cPanel seems to sometimes adjust these things. However, now the permissions seem correct and I'm totally stuck.