Issues with CFFILE and CFIMAGE together

Why after several months would a page just cease to work when it has not been touched?

This code;
<cfif len('#form.p2#') NEQ 0>

<cffile action="upload"
destination="#path#/PropertyListings/PLpics/#URL.ID#img"
nameconflict="Overwrite"
mode="777"
attributes="normal"
filefield="p2">
<!---Resize input image--->
<cfimage action="convert"
source="#path#/PropertyListings/PLpics/#URL.ID#img/#File.serverFile#"
destination="#path#/PropertyListings/PLpics/#URL.ID#img/#URL.ID#-#File.serverFile#"
width="300"
height=""
structname="picInfo">
<cffile action="delete" file="#path#/PropertyListings/PLpics/#URL.ID#img/#File.serverFile#">
</cfif>

checks if a formfield submitted has a file in it, uploads it, alters its size, saves with a new name and deletes the uploaded original. It used to work fine. Now it errors out saying;

"ColdFusion could not delete the file C:/inetpub/wwwroot/chamberocity/PlantCity/PropertyListings/PLpics/87img/e.JPG for an unknown reason. ""

Which it really really means is the permission to delete (that soon) has been revoked. If I wait 10 or 20 seconds (I have not timed it) I can delete the source file manually, If I try right away it tells me no - Even ON the server it tells me its in use.

This code worked fine from September 08 until this morning (1/26/09).
What gives?

I even tried removing the delete call and resizing the uploaded file with the SAME name, but that actually breaks it worse, when I do that the file disappears completely.
--The files go into a folder to populate an ajax image viewer. the user has complete control and the viewer shows all images in the folder, which is why I need to be able to resize and have ONE version of that image when the process completes. I do not want to have to write some extra page to delete files 'later' because of some new bug ( or what ever it is.

Server is Windows 2003 Server, IIS6, CF8
Thanks for any insight.