I am having the same issue...my host (TextDrive/Joyent, http://textdrive.com) only allows SFTP access to their accounts. I've even tried using a :22 in the host box (e.g. simplicio.com:22) to no avail. I see from other posts that you are using port 21, which is standard FTP.
Please give us an option to connect via SFTP to make the changes to our file permissions; it is in the interests of security as well. Alternatively/in addition, when the FTP process fails, give the user specific information as to what the file permissions need to be changed to, and for what folders/files. I am happy to do it myself, but give me documentation on what you need changed, and to what. For instance, tell me that you need all the files and folders from the root of my WordPress install chmod'ed to 666 or 777, etc.
Thanks in advance!