It seems lots of people including me are having problems uploading sketches to the ATmega 328.
I found that adding the old "Arduino w/ ATmega328" to the boards.txt file and selecting it from Tools/Board solved my problems.
Copy and past the following to the end of the Arduino/hardware/boards.txt file.
##############################################################
atmega328.name=Arduino w/ ATmega328
atmega328.upload.protocol=stk500
atmega328.upload.maximum_size=30720
atmega328.upload.speed=57600
atmega328.bootloader.low_fuses=0xFF
atmega328.bootloader.high_fuses=0xDA
atmega328.bootloader.extended_fuses=0x05
atmega328.bootloader.path=atmega168
atmega328.bootloader.file=ATmegaBOOT_168_atmega328.hex
atmega328.bootloader.unlock_bits=0x3F
atmega328.bootloader.lock_bits=0x0F
atmega328.build.mcu=atmega328p
atmega328.build.f_cpu=16000000L
atmega328.build.core=arduino
Hope this helps.
-BB