Smush.it plugin was my issue, I just started having this issue after installing it…. deactivated and I can upload images fine again.
I found it, was Pop Up Domination, I thought he had updated that plug in. Thanks, you can close this thread 🙂
I reset the plugin folder to .old and removed w3tc folders and files that were in the wp-content folder as well, was finally able to get logged in, but how can I find the problem plugin? if I set the plugin folder back it breaks again