There may be a solution at http://ca3.php.net/manual/en/features.safe-mode.php#55581
, depending on your host's server configuration -- you'll probably have to ask them if they can do this -- but it's possible that you won't be able to get around this restriction. In my opinion this is a "broken" PHP configuration -- any time PHP makes a directory, the permissions are set so that the directory cannot be used. OJS requires the use of different directories to organize what can easily become several thousands of files.
The sections of OJS that use the mkdir command are limited; here is a list for the current release:
If your host has a work-around that can be implemented in PHP, it would be easy to add to OJS.
Hopefully that helps...
Open Journal Systems Team