[Update:] This issue has been fixed with WordPress 3.0.
WordPress has this nice feature where you can automatically upgrade your plugins from within the Administration area. Unfortunately, this feature was broken on a site I recently upgraded. I found this cool work around. Simply put the following two lines in the wp-config.php file:
//Automatic Upgrade fix – http://wordpress.org/support/topic/238738
putenv(’TMPDIR=’ . ini_get(’upload_tmp_dir’));