You have to choose the folder, because without choosing a folder you aren't able to upload files.
If you selected the folder, maybe there is a bug in your SilverStripe Version. The Upload is based on Ajax, so every browser can handle this request. So you should update your version!
Sorry, yes I did choose a folder before clicking Upload.
I suspect that this may be a bug, but I have not been able to find evidence of anyone else having an issue with it. Upgrading to 2.3.1 may fix it, but the upload function doesn't work for me on [url]http://demo.silverstripe.com[/url] either (not sure which version of Silverstripe the demo uses).
I raised this with Silverstripe Support and it turns out it is because the library used for uploading files (SWFUpload) doesn't support Adobe Flash version 10. This is detailed in the following bug: [url]http://open.silverstripe.com/ticket/3023[/url]
By downgrading my Flash to version 9 I was able to get the upload function to work correctly.