If you use ubuntu 12.04 LTS then its very unlikely thats its the same problem as the problem is about a issue in a debian image from jailtime.org and not a ispconfig specific problem.
The most likely reason for rejected passwords is that you tried to use a wrong ftp username, e.g. using it without prefix. Take a look at the ftp user list in ispconfig, you have to use the full ftp username incl. prefix as it is displayed there.