This describes safe mode
http://uk3.php.net/manual/en/ini.sect.safe-mode.php and as far I can tell it means that you can't create a file or directory unless the parent directory is owned by the same user as the user that owns the script - note the owner of the script NOT the user the script is running as.
So if the script is owned by frank it can only create files or directories in a directory owned by frank. If you create a sub-directory it will be owned by the user that the script is running as - www-data NOT frank - so the script can't then create files or sub-directories in the new sub-directory.
So in other words you can't create directory trees using a script running as www-data because the first sub-directory the script creates cannot be written to by the script.
The only way around this would be to make the php owner www-data - which I am not sure you can even do and would be a huge security hole (irony is a wonderful thing).
I may have got that wrong, I am no expert, if so please post a reply.
