Cannot display newly uploaded images

Things were working fine with my site, which is quite new. Now, I cannot display any new images on the site.

I can display all of the images that were there, but when I create a new image (jpg) and ftp it up to the directory, it will not display in the site or in a direct call to the image in the browser (other images will display via a direct call as well as still in the site itself).

One thing I noticed, when I ftp the image to the directory, I have to change the settings (CHMOD) as they are all coming up as "xxx". I assume that is the problem but I do not know what to change w/o breaking the entire site. I have CHMOD new images to even 777 and still will not display. On my test site, I put the original theme back and I still have this problem, I had edited the theme a lot yesterday. Whatever it is happens on both my test site and my production site (yes they are on the same server, Linux).

On the production site, I am running very few modules. cck, teaserbytype, views are the optional ones, I have not changed them in 4 days and this problem just started last night.

Any help would be greatly appreciated.