Unfortunately unchecking the "ability to create sub albums" completely removes the "create album..." link from the "Upload Photos" page. Come to think of it, this is probably a bug that would need looking into.

For the time being, I modified the "add_photos.php" file. I know I'll have to keep an eye on it after any updates though.

Original:
display_select_cat_wrapper(
  $query,
  $selected_category,
  'category_parent_options'
  );

My version:
display_select_cat_wrapper(
  $query,
  $selected_category,
  ''
  );

This accomplishes what I was looking for.

Thanks for the reply though.