This is probably addressed elsewhere, but I couldn't find reference to it.
If you create albums manually (ie, via file manager/ftp instead of the interface), do not put spaces in the title of the folder. If you do, you will not be able to upload pictures to it via the interface. The spaces are replace with %20, or something like that, and the program says it can't find the folder, even though it's there.
Anyway, it looks like the folder in the file system and the album title can be completely different, so this isn't a problem.
Hope this helps somebody out there...
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This is a bug, by the way, not just a tip. I'll make sure the uploader can upload into albums with spaces in the next release.