Nothing changed here for some time aside from the security fix and it should cause no issues like this. If dropping the old Flash file in doesn't sort it, then that variable has been removed which would indicate that something else is causing the problem.
Try disabling the Flash uploader. If there are still problems, then those need to be sorted. If it's Flash specific, it's likely a mod_security issue, though also try with a particularly small file (something like a .txt file) to confirm there aren't some underlying network issues.
Oh, as another note, there are some scenarios where the Flash uploader falls over due to Flash limitations. Make sure your site isn't password protected.
Damn & I just wiped it! Wouldn't upload a tiny avatar. Both my sites (main & dev) are in password protected directories as we're not live yet. I think I had this issue a few weeks ago & Slavik mentioned this. Memory like a bloody sieve!
I'll just have to make the tester aware it will work better when we go live!