I spent the past two hours going nuts over all the fixes for the image uploader. I have several WP blogs in the same server and only my new blog was having this issue.
Buried deep inside some thread, someone commented that password-protecting the admin area was causing problems.
I had totally forgotten that I had password protected my whole blog while I was configuring the theme, writing the first few posts, etc!
Sure enough, removing the password protection makes the image uploader work again. I hope this helps someone...