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The 777 permissions are so that PhpDig can access and write to directories and files. Assuming PhpDig is secure, then you shouldn't have to worry about web users in general. Of course, if there is a bug in PhpDig that allows badness, then 777 can be an issue. Futher, if you use a shared hosting environment, 777 might allow users on the same machine to do badness, so your host should do what can be done to prevent shared users from accessing your account, such as making sure users are locked into their own accounts.
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