Just discovered that the fcgid apache module has a very low HTTP max request length of 131072 bytes by default. Which was causing the Worpress client to exit with a server 500 error when uploading a post.

This showed up in error_log as a MaxRequestLen error

The old limit before Apache 2.3.6 was 1GB so as the docs mention you should set it to something sane.I chose 10 485 760 which equates to 10MB.

So in my virtualhost section i put:

FcgidMaxRequestLen 10485760