I recently updated my Snow Leopard installation to Lion, and I couldn't ftp into my localhost. I went into the system preferences pane > sharing > file sharing > options and looked for the FTP option. It's not there! Apple has removed the FTP option from the GUI, so you now have to enable it through terminal. I had to wait on tech support to get that answer, so I figure I'd help someone else out. Someone like me is bound to run into this issue. Here's the link to the article they sent me that fixed the issue: http://support.apple.com/kb/HT4704?viewlocale=en_US.
Note: In step three, you need to add yourself again, even if you are the admin user that was put in step one.