Danie,
A similar problem has been bugging me for the past few days. The only difference was that my script worked with Netscape and failed with Internet Exploder. I tried uploading to Apache both on Windows and Linux. I also tried a couple sample scripts I picked up at various places but these didn't work with either browser. I finally removed the MAX_FILE_SIZE variable and everything worked fine. It looks like the temporary file gets created on the server but by the time the PHP script receives the data, the file's cleared since it's too big.
hope this solves your problem,
brian