Index: wp-includes/js/plupload/handlers.dev.js
===================================================================
--- wp-includes/js/plupload/handlers.dev.js	(revision 20475)
+++ wp-includes/js/plupload/handlers.dev.js	(working copy)
@@ -83,7 +83,7 @@
 	serverData = serverData.replace(/^<pre>(\d+)<\/pre>$/, '$1');
 
 	// if async-upload returned an error message, place it in the media item div and return
-	if ( serverData.match('media-upload-error') ) {
+	if ( serverData.match('media-upload-error') || serverData.match('error-div') ) {
 		item.html(serverData);
 		return;
 	} else {