Folder and file permissions after upgrade to 5.4.2

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I checked my server logs today and noticed the following kinds of errors:
[Mon Aug 29 13:48:40 2011] [error] [client 66.249.66.17] SoftException in Application.cpp:256: File "/public_html/updates/concrete5.4.2/concrete/controllers/dashboard/pages/controller.php" is writeable by group

Now if I check my server, all folders and files under concrete5.4.2 folder are using permission 777. This cannot be very good.

The regular folder permissions for my server are 755 for directories and 644 for files. Why does the update create such permissions and can I safely change the permissions to the correct ones?

Hypocrite