Have you installed "Get The Imgae" Plugin?
If not then Follow the steps
1. Make the folder permission as I described.
2. Install Get The Image Plugin & activate it.
3. As you are using Solostream Theme you must put off the automatic thumbnail generation from Theme Options or in a individual post.
4. Upload/Choose a Featured Image in WordPress backend for every post.
5. You are using DreamHost Service if the folder permission doesn't work then contact DreamHost Support for exact Folder Permissions, what I listed was for HostGator, MediaTemple & BrainHost.
Let me know your replies.