No the images can be set to 644 or 666
Now the only thing I would ask here about this error is this
warning: move_uploaded_file () moved: 'var/temp/phpJMP0fm to home/scrapbo1/public_html/uploads/disney.jpg in
Why is there not a userid on this upload directory? Our script uploads a file to the uploads directory /USERID/FILENAME
Note the error above has no user directory. Just make sure all the proper files are uploaded and the permissions on everything is set per the install instructions here
http://www.photopost.com/installphp.html