I wrote this function for fully supporting file and directory copy. As you may have noticed there are feature that didn't have time to implement , but if you have time to implement them or even add more cool features, please notify me as well :). It's also shared here

Update : Thiago has written a different version of this function

Several sites considered this function the best solutions for copying files!

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    /**
    * Create a new directory, and the whole path.
    *
    * If  the  parent  directory  does  not exists, we will create it,
    * etc.
    * @todo
    *     - PHP5 mkdir functoin supports recursive, it should be used
    * @author baldurien at club-internet dot fr 
    * @param string the directory to create
    * @param int the mode to apply on the directory
    * @return bool return true on success, false else
    * @previousNames mkdirs
    */

    function makeAll($dir, $mode = 0777, $recursive = true) {
        if( is_null($dir) || $dir === "" ){
            return FALSE;
        }
        
        if( is_dir($dir) || $dir === "/" ){
            return TRUE;
        }
        if( makeAll(dirname($dir), $mode, $recursive) ){
            return mkdir($dir, $mode);
        }
        return FALSE;
    }

    /**
     * Copy file or folder from source to destination, it can do
     * recursive copy as well and is very smart
     * It recursively creates the dest file or directory path if there weren't exists
     * Situtaions :
     * - Src:/home/test/file.txt ,Dst:/home/test/b ,Result:/home/test/b -> If source was file copy file.txt name with b as name to destination
     * - Src:/home/test/file.txt ,Dst:/home/test/b/ ,Result:/home/test/b/file.txt -> If source was file Creates b directory if does not exsits and copy file.txt into it
     * - Src:/home/test ,Dst:/home/ ,Result:/home/test/** -> If source was directory copy test directory and all of its content into dest      
     * - Src:/home/test/ ,Dst:/home/ ,Result:/home/**-> if source was direcotry copy its content to dest
     * - Src:/home/test ,Dst:/home/test2 ,Result:/home/test2/** -> if source was directoy copy it and its content to dest with test2 as name
     * - Src:/home/test/ ,Dst:/home/test2 ,Result:->/home/test2/** if source was directoy copy it and its content to dest with test2 as name
     * @todo
     *     - Should have rollback technique so it can undo the copy when it wasn't successful
     *  - Auto destination technique should be possible to turn off
     *  - Supporting callback function
     *  - May prevent some issues on shared enviroments : http://us3.php.net/umask 
     * @param $source //file or folder
     * @param $dest ///file or folder
     * @param $options //folderPermission,filePermission
     * @return boolean
     */
    function smartCopy($source, $dest, $options=array('folderPermission'=>0755,'filePermission'=>0755))
    {
        $result=false;
        
        if (is_file($source)) {
            if ($dest[strlen($dest)-1]=='/') {
                if (!file_exists($dest)) {
                    makeAll($dest,$options['folderPermission'],true);
                }
                $__dest=$dest."/".basename($source);
            } else {
                $__dest=$dest;
            }
            $result=copy($source, $__dest);
            chmod($__dest,$options['filePermission']);
            
        } elseif(is_dir($source)) {
            if ($dest[strlen($dest)-1]=='/') {
                if ($source[strlen($source)-1]=='/') {
                    //Copy only contents
                } else {
                    //Change parent itself and its contents
                    $dest=$dest.basename($source);
                    @mkdir($dest);
                    chmod($dest,$options['filePermission']);
                }
            } else {
                if ($source[strlen($source)-1]=='/') {
                    //Copy parent directory with new name and all its content
                    @mkdir($dest,$options['folderPermission']);
                    chmod($dest,$options['filePermission']);
                } else {
                    //Copy parent directory with new name and all its content
                    @mkdir($dest,$options['folderPermission']);
                    chmod($dest,$options['filePermission']);
                }
            }

            $dirHandle=opendir($source);
            while($file=readdir($dirHandle))
            {
                if($file!="." && $file!="..")
                {
                    if(!is_dir($source."/".$file)) {
                        $__dest=$dest."/".$file;
                    } else {
                        $__dest=$dest."/".$file;
                    }
                    //echo "$source/$file ||| $__dest<br />";
                    $result=smartCopy($source."/".$file, $__dest, $options);
                }
            }
            closedir($dirHandle);
            
        } else {
            $result=false;
        }
        return $result;
    }