Call to those familiar with wordpress and webhosting
In the attempt to start a podcast, I purchased hosting on dreamhost.com with not much forethought. I had set up Wordpress with their one click installation, but have come to find that I can't post files over 10 mb because of limitations set by a file called php.ini. I have no idea where to find this file. I probably should have read up on some things before running to get my website going.
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By the way, I highly recommend the Wordpress Codex if you are new to WP. It's very helpful in finding out how to do things. Yes, yes you can.
If you use the PodPress plugin, you choose a directory where your media files are located. I just made a folder in my root directory (domain.com/podcasts) and put all my podcast files in there with an FTP client. I never use the file upload function in the Wordpress interface, even for images. FTP is teh easiest way to do it, and there are plenty of free clients like Filezilla available.
I am curious why you say that Dreamhost is lame. I've been there since 2002 and they provide pretty decent service. Dreamhost is actually great for Wordpress users because they offer a 1-click install.
Edit: A a side-note, this was YEARS ago.
They've also gotten a lot better about down-time. It used to be fairly frequent ( back in '02-'04) that a website would go down for an hour or two, but now it rarely happens to me.
That said, I would only recommend them for small to medium traffic websites. If you've got heavy traffic, I'd go with a service like Linode. DH has a limit on the number of concurrent connections, so even if you're far below your bandwidth, your traffic would be limited if you have a bunch of people hitting the site simultaneously.