"General question - I've seen this fix in a number of places and I'm wondering if it's a security issue to have all of these folders set to 777? Thanks. "
and I have the same concern. In order to get image uploading to work, I had to manually create an uploads folder and set its permissions to 777. wp-content, its parent folder, is at 755.
I'm uncomofortable with leaving the uploads folder at 777. I don't know much about chmod or permissions, but it seems like public access means someone could upload a nasty pic with the same name as one of mine, overwrite mine, and thus show the world whatever disgustingness they would like. On my site.
Anyone who knows more about security that can offer an informed opinion?