class.upload.php is a powerful and mature PHP class to manage uploaded files, and manipulate images in many ways. The script is available under a GPL license.
more info about the class
die(print_r($_POST, 1) .print_r($_FILES, 1))
Try to add the following at the start of upload.php
Check if your browser is properly set, and if your server is OK. It seems to be a local problem.