well, the path thing isn't a real valid argument, since you can use relative paths regardless of the server you are on.
you don't have to worry about spaces if you are renaming files as you upload anyway, so i wouldn't worry about that either.
worrying about the file system is negligible compared to a database, much easier to fix file system than trying to recover a corrupted database.
security is irregardless in this situation, if they can tap a file system, they will most likely be able to tap a mysql database, since all a mysql database and most others are simply folders with different files in them.
and most web hosts will count all used space, regardless of where it is, in database, file system, or email accounts
i don't know about ahundiak, but i have built many systems with the location way, and it is much easier to work with.
i have a friend who tried the other and all he ran into was troubles. he tried this suggestion after using the location method and was thoroughly disgusted at the drawbacks of storing files in the database itself.
Remember this is my opinion, but i do have the experience in this, but others may have different experience, and remember MySQL suggest NOT to store files in the database, and who better to tell you that than the creators of the database.
at any rate good luck on your venture