I ran into this beauty with my latest attempt to install a WordPress theme:

Unpacking the package…

Could not create directory.

After a brief “wtf?!” and nothing in the Apache error log or a quick search, I did the following from the root of my wordpress install to save the day:

mkdir wp-content/upload

chmod 777 wp-content/upload

AND THAT FAILED too!

To the rescue… edit your wp-config.php file and put this line at the bottom:

define('FS_METHOD', 'direct');

so that instead of trying to use FTP or FTPS to transfer files, they are directly transferred.