issue had returned in PS 1.7.8.5
I had tried repeatedly editing the php.ini session.save_path to /tmp - to no improvement (even with clearing cache).
My fix was to instead make the the directory change in the cpanel multiphp INI and then clear the cache. Apparently, at least with my server setup, the mod from the cpanel dashboard does more than just the line edit of the php.ini (while it does do that as well). Maybe it's a matter of a setting that cannot be overridden by simply doing the line edit of the php.ini .
Now I finally have debug mode back, and can confidently upgrade, again.