Brian, I just asked around a bit and everyone had the same thoughts I did: we remember 775 causing issues and 777 not causing issues. We don’t remember the specific problems though. If you wanted to test it out to see if it would work on your servers it’s easy enough. Take a look at system/codeigniter/application/config/constants.php and change DIR_WRITE_MODE from 0777 to 0775. If you do try it out, let us know how it goes. We’ll make sure to look at it as well.
Wes
Edit: I found Derek’s reasoning for 777 here http://ellislab.com/forums/viewthread/126098/#623356
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