RE: How can I add sub-directories in the images folder???

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to fix that you would either have to turn safe mode off on your server or using relative directories might help.

Either that or you could change the permissions on your images directories before starting.

Perhaps doing a chmod in the code after creating the directory might help you.  I didn't get any of the warnings you described - I'm just speaking generally.

If all else fails you can run the script locally and then move it to your live server - but that might be a drag.

Have a sniff around the php boards about safe mode - or perhaps someone can will know more about it than I do on these boards.