For some time WordPress image upload was failing here. I do not know when this started today yesterday was the first time I received a complaint about this problem.
The graphicsmagick image manipulation library which is a fork of the imagemagick image manipulation library is just completely broken under Ubuntu 16.04.1 LTS and core dumps. This broke PHP code that was manipulating images such as generating the resized image and thumbnails after you uploaded an image.
I removed the graphicsmagick libraries and replaced them with the older and functional imagemagick libraries and now I am able to upload images properly.