For the longest time it was a nightmare uploading images. Sometimes it would work, sometimes it wouldn't. I re-formatted images, sometimes ten different times before WP would accept them in the media browser. I read many, many, posts, reset things, changed permissions on things. I've lived with this problem for so long and I finally think I solved the issue.
If you are experiencing http errors or general cannot upload messages with your media, I would encourage you to try the following.
1. Access your .htaccess file using FileZilla or any other FTP client. You should see it as soon as you connect to your websites database.
2. In the .htaccess file, paste the following code right before the final line:
Options +ExecCGI
addhandler x-httpd-php5-cgi .php
This disables FastCGI. Not sure what it is or what it means, but it worked. I'm hosting my site through GoDaddy using X theme.