Have you tried these things?
1. How are you connecting to the internet and to WordPress.com? The way you connect to the internet (mobile, satellite, DSL, dial-up) and to your blog, and how many proxy server jumps etc. it takes to connect can cause problems. There maybe be problems with your ISP and/or with the proxy servers.
2. Are you using http:// or https:// see http://en.support.wordpress.com/https/
3.Which browser and version of it are you using?
4. Have you tried clearing your browser cache and cookies? http://www.google.com/support/accounts/bin/answer.py?hl=en&answer=32050
5. Is your browser version up to date? You can upgrade any browser version here.
6. Do you have third party cookies enabled?
8. Do you have another browser you can try?
Reference link: Drag & Drop Media Uploader & Flyout Dashboard Menus