Drag-and-drop file uploading can be done in Firefox 3.6.
A Google search for html5 drag-and-drop file uploading -gmail gives things like:
I've got something working in Chrome after much, much, much detective work. This only works on Chrome. On Safari, it freezes. On Firefox, it won't let me drop the file. IE opens the dropped file instead. Even in Chrome, the drag and drop only works once, for some reason, after which you have to refresh the page. (A possible reason for this is that something is wrong with the event handlers.)
Drop here
handler.php:
// This is not a true file upload. Instead, it sends the raw data directly.
echo htmlentities(file_get_contents('php://input'));