I am worried on installing Wp-Minify plugin. But it needs 777 permission for the cache directory located inside wp-uploads directory. Isn't it a security issue?
It doesn’t need
The real problem: the plugin wants to write into its own plugin directory.
This is bad. After each update, the whole cache will be gone, and if you don’t allow write access to the plugin directory by default, the plugin will just not work.
And a hard codet
toscho is right. So you could probably give a try to another plugin. The Better Wordpress Minify.
This one also uses a folder inside the plugin's folder, BUT. You can change the folder and place it elsewhere. Please have a look at Advanced Customization.
We have been using it without a problem.