When using setFolderName like this:

$fields->addFieldToTab('Root.ProjectImages', $thumbField = new UploadField('ProjectThumb','Main Thumbnail'));
$thumbField->setFolderName('portfolio/project-images/'.$this->URLSegment);

My uploads return a 403 error as the folder created only has 644 permissions and not 755. The upload works but just shows a question mark in the thumbnail box..
I can manually change the permissions my self but this is not practical for other users etc.

How can I fix this thanks?

As far as I'm aware the default is to create folders with 755 permissions:

http://api.silverstripe.org/3.0/source-class-Filesystem.html#16-27

Is this on your development server, or could it be an issue with the web host?

That's what I thought, and its not been an issue before. But after speaking to the host 123-reg (who are a terrible choice for SilverStripe but I had no choice) they say its nothing to do with them..
I did look into setting a yaml file to force it to 755 but didn't work it out.

Its on a live host so probably something to do with their settings.. It does not cause an issue on my developing server...