/files/ and all items within (both files and directories) should be set to be readable and writable by the web server. That can be accomplished in the following ways, from best to worst:
- If your server supports running as suexec/phpsuexec, the files should be owned by your user account, and set as 755 on all of them. That means that your web server process can do anything it likes to them, but nothing else can (although everyone can view them, which is expected.)
- If 1 isn't possible, another good option is to set the apache user (either "apache" or "nobody") as having full rights to these files
- If neither 1 or 2 are possible, chmod 777 to files/ and all items within (e.g. chmod -R 777 file/*)
This must include the cache_objects directory, or you're going to get all kinds of strange behavior with your site.