I am having exactly the same problem as here: http://wordpress.org/support/topic/191038.
I have several sites running WordPress, versions 2.6.5 & 2.7, on my own server, all work perfectly. But I have just upgraded a site hosted on a different server to 2.7, and now the image uploader doesn't open in the iframe, instead it loads in the main page, so I lose my post, and the 'insert into post' does not work. It worked fine when it was running 2.6.5.
I have disabled all plugins, cleared my cache (several times!), but nothing works.
Any ideas what might be causing this?