permissions - confused

Hi

I am using php to upload an image to a directory. It seems that this will
only work when I allow world write access to the images directory. I have
read that this is not good for security reasons. However - I cannot see a
way round it. By allowing r-w-x for world on the images directory does it
mean that anyone can upload and run files?

My basic file structure is.....

PHP> (password secured directory)
padmin/myphpupload.php

Images> (both images and gallery are set to r-w-x for all)
images/gallery


I am a newbie to this permissions game and am pretty confused. Help needed!

Thanks, Matt