Recently users and I started getting error when trying to update a list or adding a new user:
As a Farm administrator and site collection administrator, I had full access to the site. Also, earlier I had no issues updating lists, so it was flabbergasting at first why this error was cropping up.
Then I remembered that the only change I made to environment was to add multiple bindings in the site.
I had added both server:8080 and server.production.online.domain.com:8080 to IIS bindings.
Further, a quick search on the net gave me multiple articles about WCF having issues with multiple bindings (http://mrhodes.net/2010/03/30/sharepoint-designer-2010-the-server-could-not-complete-your-request-the-content-type-of-the-response-is-8/, http://social.msdn.microsoft.com/Forums/vstudio/en-US/96390c8b-efa1-4471-8f36-6cd615c5f120/iis-hosted-wcf-with-two-bindings?forum=wcf etc.)
So, as soon as I removed the additional binding e.g. server:8080, I was able to edit lists without the above error!