Hi,
This can happen due to many reasons :
1> Incorrect upload path at wp_options table .
2> upload_max_filesize and post_max_size is less than the uploaded image size .
Contact your host for following values:
upload_max_filesize
post_max_size
max_execution_time
max_input_time
3> Disable mod security :
Add these code in wp admin .htaccess :
<IfModule mod_security.c>
SecFilterEngine Off
SecFilterScanPOST Off
</IfModule>
4> Try to upload from private browser .