Wordpress asks for FTP credentials to upgrade
Wordpress asks for your FTP credentials when it doesn't have write access to all the folders it needs. It's a misleading error message - it should really just say "Please give me write permissions on your root folder while I do this upgrade".
This problem seems especially common in IIS users where the permissions/user accounts are a bit more arcane.
Essentially, to solve it:
- Give your Application Pool user (often IUSR for Windows users) write and modify privileges on the root folder of your wordpress installation.
- Run the automated upgrade from the Wordpress dashboard, which should happen nice and easily now.
- Remove the write/mod privileges from IUSR to resecure your installation (making sure it can still write to your plugins directory)