Last month I did a fresh install on this server and I had so many problems with 2.8, so 3 days ago I did another fresh install of 2.8.1, but I got my SQL backups corrupted somehow… anyways, I last logged that I could not get the http_error to go away and it seems to be a very common problem for users who upgraded to 2.8 and up. When you are using the default image Flash Uploader, it’ll says http_error in red. If you use the Browser Uploader, it just goes blank after you hit Upload. Even though the imag is uploaded, you cannot do any further editing with it (see screenshots):
I’ve tried messing with the .htacess, making file sizes smaller. Making images smaller than 600px wide seemed to work for some, but not all. Then I also noticed that Nextgen Gallery also has the same problem as the default image uploader. In fact, NextGen Gallery warns that maximum memory exceed at 16.xxMB. So I went to NextGen Gallery’s site and found this in the FAQ. Then I went into my Cpanel to investigate the PHP settings, lo and behold the memory_limit is set to 16MB. I opened up a ticket to ask my host to increase the limit to 24MB, problem solved. I no longer have any error when uploading any images.
One last thing though, after I got the memory_limit changed from 16MB to 24MB. I started to get 505 Internal Server Error. Luckily, I have a very awesome host, they fixed the problem within half an hour after I opened a ticket. Although, my host used .htaccess to fix the problem. Then a new problem came out, all the permalinks seem to be no longer working. They all returned as 505 Internal Sever Error. I solved it by checking the .htacess file and took out what my host put in and just left the WordPress .htaccess – problem fixed.
Hope that helps someone else out there.

