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No, your host blew it. Let's look at the line which throws the error:

if(is_writable(ini_get('session.save_path')))

It gets the session save path from the php.ini settings and checks if it's readable. According to the error message you get, your host set the session write path to be the system wide /var/lib/php5 directory. Sure thing, they changed this directory's permissions. But then, they forgot they had set up open_basedir restrictions in their user's account, meaning that the system-wide directory is, of course, unwritable...

Just tell your host that they MUST add /var/lib/php5 to their open_basedir restrictions settings so that your account can work.

If they can't do that, just give 0775 or 0777 permissions to the installation directory and retry accessing the restoration script as http://www.yoursite.com/installation/index.php. This is workaround also documented in our Quick Start Guide.

Please ask them to modify the session save path for your account so that it is in a writable directory, not restricted by open_basedir restrictions.

As a temporary alternative, you may try to give broader permissions (like 0775 or 0777) to the installation directory once it's extracted, i.e. just before clicking the "Run the installer" button in Kickstart.

You're welcome!

You could have saved some time by taking a peek at the Troubleshooting Wizard which appeared before posting here. This is really a hosting configuration problem, but we provide a few workarounds which usually work. Please read the instructions on this page first. If that doesn't work, you'll have to ask your host to fix the wrong PHP session save path setup on their server.