Okay when on YouTube viewing your channel click Themes and Colours and then Advanced Options at the bottom, that should point you in the right direction The Upload link at the top is solely for videos.
Very odd, I just checked and tried myself, it didn't work the first time I tried three times before it actually showed up, it could be a YouTube bug, I am using Firefox 6 here so I am unsure about other browsers, the background is fine though:
Its very odd it mentions the video couldn't be uploaded when its for your background.
Whats the best way to get subscribers. i tried commenting on your channel. Can you like go to my channel copy the link and post it on your channel comment and say everyone subscribe. Because they will listen to you?