If you just read the error you'll notice that it's trying to write a file to files/thumbs. Do you have a files/thumbs directory? And if you do is it writeable by all (777)? At some point you decided to turn on thumbnails and is probably why you're seeing this error now.
Right you are, sorry about that. I can see why the error occured.
We used to have all our attachment groups set to "inline" and working fine. Then after the upgrade, images that were of a large size and required to be downloaded would open a new browser window them prompt the user with a dialog to save or open, which was undesirable for us.
At that point I set the image attachment group to "physical" after reading the phpbb forums which appeared to fix this. However, quite some time ago I'd had a failed attempt to get thumbnails displaying, and after an upgrade on our server, this started working properly but didn't have a thumbs folder.
Whoops! Got it all sorted now by disabling thumbs and leaving it set to "physical". Appreciate the help!