Definitely a file permissions issue. In a nutshell, this error means that your website cannot write/add/delete files in the plugins folder on your webserver.
To fix this you need to update your file permissions for the WordPress install on your server. You will need SSH access to your server with the user that has write permissions.
DO NOTE: If you have never changed file permissions on a server before and are not sure how to do it, I would definitely contact your host and have them do this for you. Messing around in the command line can really screw things up if you do something wrong (been there, done that).
ASSUMING YOU’RE ON A LINUX SERVER: Once you SSH into your server, you can run these 2 commands to update all the permissions to their proper (and secure) settings.
find /path/to/your/wordpress/install/ -type d -exec chmod 755 {} \;
find /path/to/your/wordpress/install/ -type f -exec chmod 644 {} \;
This will change all of the files on your wordpress install to 755 and all of the folders on your install to 644. That should allow you to do anything you need to from the WordPress admin.
SOURCE: http://codex.wordpress.org/Hardening_WordPress#File_Permissions