We also faced the same issue about which lot of people are talking in this discussion.
.Actually ClientBin folder of project contains one file as "Telerik.Sitefinity.Silverlight.xap" which is used by sitefinity's
upload control. We found that in one of our machine where upload control is working well even after upgrading from sf 4.1 to 4.2
is having "Telerik.Sitefinity.Silverlight.xap" file which is of size 445 KB and the same file is of 441 KB in another machine
where upload control is not working after upgrade.We got this issue resolved by taking the contents of ClientBin folder of a
project where the image upload works and placing them in our ClientBin folder.
This issue could possibly be caused by those files not being updated with upgrade.