Product image upload problem in magento 1.6

1. Download prototype.js version 1.6.0.3
2. Go to Magento/js/prototype –  here rename prototype.js with old_prototype.js
3. Then copy downloaded prototype.js in Magento/js/prototype
4. In the /app/etc/config.xml file change the initStatements node from:

<initStatements>SET NAMES utf8</initStatements>

to:

<initStatements>SET NAMES utf8; SET FOREIGN_KEY_CHECKS=0; SET UNIQUE_CHECKS=0;</initStatements>

Flush the cache and then you can upload image for products.

Reference: http://blog.magentoconnect.us/image-upload-problemissue-magento-1-6/