I've managed to find the problem and it was TortoiseSVN. The connection to server message was just misleading.
Any commit operation I applied was getting handled just fine (so it wasn't the server), but it was subsequent handling of log messages which was a problem. Experimenting, I turned off the Log Caching (TortoiseSVN -> Settings - > Log Caching) it worked perfectly again. Just took me some time and luck to sort it out. Thanks, Dave Steadman.
