Another day another problem

Just when I finally managed somehow to
create a SFTP connection for another user it seams like that could be the source for my next problem.
I have a joomla site, which I transfered to Linode, made a SFTP account so user can upload files and can't see other stuff on server. Site is working fine, but I can't upload images (and I guess can't install modules) from joomla admin interface.
In joomla admin, when I go to Information - Directory Permissions I see that all folders have status Unwritable.
If I log in as a root (user can't change permisions) and change permisions to 777 it all fine, I can upload images.
But that is a security risk, right? What should I do now? How to set permissions to 755 and still be able to upload images and install modules?
Thanks for any suggestion!