Finally found the solution in the MediaWiki documentation. The problem was the ownership of the images directory. Making the adjustments suggested in the documentation eliminated the problem. See the following for details: http://www.mediawiki.org/wiki/Manual:Configuring_file_uploads
Specifically, do this:
sudo chown -R www-data:www-data images/
sudo chmod -R 755 images/
Your installation MIGHT use the uploads/ directory instead. If so, do the same to it.