So, when when on my clients emailed me to say that his WordPress site was giving him an error message that read:
Unable to create directory /home/.spuds/user/domain.com/wp-content/
I knew that I had been bitten by this error. OK, how to fix it? I grep'ed the WP PHP files, but couldn't find a path like that. So where was it coming from?
On a hunch, I decided to look at the wp_options table in the WP database and found a row called upload_path, and sure enough, it contained the offending directory. I just removed the ".spuds" portion of the path, as per DH's directions, and it all worked.
So, if you're on DreamHost, and they moved your WordPress blog, and it suddenly stopped working with that error message, try looking through wp_options in your databse. (FYI, DH puts a random string between the wp and the options to prevent collisions with other users in the same database.)