I, like many others, have been getting the HTTP Error at the "Crunching" stage of image upload on WP 2.5 One thing that I've noticed is that the full-size image is successfully uploading (although the Image Uploader gives the impression that it hasn't - it also says "An error occurred in the upload. Please try again later."). However no thumbnail image is created.
I've just adjusted some photos in a program so they are thumbnail size, and uploaded those through the Image Uploader on WP. This time round, the uploading happened with no error - and thumbnails were created by WP of these (smaller, already thumbnail size!) images.
It would seem that an issue that I was having, and other people could well be having this too, is that WP throws up the error when the photos are too big. The photos I was getting an error on at dimensions of 1600x1200 and in the range of 1-1.5MB.
If this is the reason of the error happening, then I would imagine it would be happening a lot as modern digital cameras produce images this size, and larger. It's not very convenient if you have to adjust photos before you can upload them onto a blog - and potentially not possible for people travelling or otherwise away from their computer.