I'm on a CentOS server. My phpMyadmin "vanilla" install uses the folder /var/lib/phpMyAdmin which contains the 'config', 'save' and 'upload' folders. I DIDN'T HAVE TO CHANGE the PHP $cfg['UploadDir'] setting away from the system default (which in my case uses ./tmp).
Anyway, all that was necessary was that I ftp the large (500+MB) .csv file that I want to import into my database into the folder /var/lib/phpMyAdmin/upload. Then navigate to the Import tab in phpMyadmin and the option for "web server upload directory" appears. The drop down menu now shows the file I just placed in /var/lib/phpMyAdmin/upload.