Wordpress - WP upgrade can't create directory even though perms are 777

You need to run the chown command on whole wp-content directory:

chown www-data:www-data /path/to/wp-content/ -R

Cannot creating directories even through a 777 CHMOD imply that your FTP local users does basicaly not have the permission to write files on your machine, to fix that try to edit your vsftpd.conf file and check that write_enable is equal to YES

Edit vsftp.conf file

sudo vim /etc/vsftpd.conf

then uncomment the existing line (or set it's value to YES)

write_enable=YES

The fix turned out to be to change vsftp's permissions in the vsftp config file.