Yeah, I've been wrestling with this issue for the last week. It appears that WordPress uses two zip libraries. The first is ZipArchive which is a PHP module and is not necessarily activated on every server. It seems to be able to handle the update correctly.
If ZipArchive is not activated, which I think is the case with your setup, WordPress uses PCLZIP to unzip the downloaded plugin zip. As far as I can tell it errors because the plugin zip contains .zip skins for the JW Player. I'm trying to contact the author of PCLZIP to see if this is a limitation.
In the meantime, if it's not too much trouble you should be able to directly download the plugin, unzip it and then ftp the folder to your plugins directory. Obviously that's less than ideal but it should work for you.
If you have any other problems just let me know.