- Warning: gzinflate() [function.gzinflate]: data error in ../wp-includes/http.php on line 1787
appears to have been corrected in WordPress version 2.9 which is still in beta.
I am actively looking at ways to work-around this issue prior to the release of WordPress 2.9. Until then, I am available to help with upgrading to the beta version which I see as stable; and, I am running it on several live sites without a significant issue.
NB: WordPress 2.9 was released Dec 18, 2009.