I just upgraded our webserver from ISPCP Omega 1.0.5 to 1.0.7 and also upgraded our Debian dist from Lenny to Squeeze and run into a problem with PHP upload size. It seemed as if the upload limit had been set to 150kb (php.ini upload_max_filesize ), but it had not. Instead there was a limit in fcgid_ispcp.conf file.
If found my answear in this post http://fromopics.com/blog/server/2011/11/wordpress-upload-error-fix/
In case the posts get deleted I will paste the guide here:
1. vim /etc/apache2/mods-enabled/fcgid_ispcp.conf
2. Add MaxRequestLen 157286400 inside the tags <ifmodule>
3. Restart apache: /etc/init.d/apache2 restart