Been dealing with the tech support at Webair (who have been great) and they say there are no errors being generated by php and apache server side when trying to use the script, and that folder permissions and ownerships are what they should be for this.
Their conclusion is that its something to do with the script, which i have to agree with as I'm also running wordpress on the same site, and that can create folders and files when uploading using it!?
Anybody have any ideas??
