First, let's get these out of the way:
- There are no open handles on the directory.
 - There are no files in the directory.
 chmoding the permissions to 0777 does not prevent the error.- the directory name is correct.
 
Now then, here's my problem.  rmdir() is throwing this error when trying to delete the directory: 
rmdir(098f6bcd4621d373cade4e832627b4f6) [function.rmdir]: Permission denied in path\to\administrate.php on line 124
098f6bcd4621d373cade4e832627b4f6 is the name of the directory.
Here is the relevant portion of the script.
if(is_dir($userhash)) :
foreach (new DirectoryIterator($userhash) as $fileInfo) {
    $fileName = $fileInfo->getFilename();
    if($fileInfo->isDot()) continue;
    if(!rename($userhash.'/'.$fileName , 'trashcan/'.$username.'/'.$fileName)) {
        echo '<p class="error">Could not move '.$fileName.'</p>';
        $err = 1;
    }
}
else :
    echo '<p class="error">Unable to delete files! error: 67</p>';
    $err = 1;
endif;
    //JUST TO BE SURE
    chmod('./',0777);
    chmod($userhash,0777);
// RMDIR ONCE THE DIR IS EMPTY.
if(rmdir($userhash))
    echo '<p class="success">Deleted the user directory. The files are in the trash.</p>';
else {
    echo '<p class="error">Could not remove the user directory. Error: 656</p>';
    $err = 1;
}
Update
I manually created the dir 'jake' in the same directory.  I did rmdir('jake'); and it worked great.  Now, I manually created a dir '098f6bcd4621d373cade4e832627b4f6' in the same directory. I did rmdir('098f6bcd4621d373cade4e832627b4f6'); and it errored!
Update 2
This is beginning to look like some weird rmdir() bug, as unlikely as that seems. Here are directory names I've created and then tried to remove with rmdir;
098f6bcd4621d373cade4e832627b4f6        |  didn't work (quintuple checked)
098f6bcd4621d373cade4e832627b4f7        |  worked
098f6bcd4621d373cade4e832627b4f         |  worked
098f6bcd4621d373cade4e832627b4f66       |  worked
				
                        
In order to be able remove file:
UPDATE: About restricted deletion flag - from
man chmod:You may SET it by adding 1 to the first octal digit in mode, for example:
UPDATE 2:
Does user, under which php is executed, has permissions to chmod parent directory?
In other words, are you sure that first chmod call returns true?