WordPress 3.0 Upgrade Complete after Solving Fatal Error: Out of Memory Issue

- Image by Jonathan D. Blundell via Flickr
If you are trying to upgrade your WordPress installation to 3.0 via the automatic update and have 1and1.com as your host, you will probably get the Fatal Error: Out of Memory error. This has to do with the PHP memory allotment on their shared servers.
Here is how you fix it. (There is another possible issue and they are not guaranteeing success with the upgrade, but I couldn’t exactly understand what the guy was saying.)
Open notepad.
Copy the following code in to notepad:
memory_limit=40M
Save the file as php.ini
Upload via FTP to BOTH your root directory of your blog as well as the wp-admin directory on your blog.
Try again and let me know how it goes!
Good luck!

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I tried adding the file I created to the WordPress main folder, as well as the wp-admin folder, and even in my theme folder, and it still gives me the same error. Please help!
John, do you host with 1and1.com?