You dont use your xbox as an ftp server you use ftp to access the hdd on your xbox and change files. People do this to play game backups and run apps on the xbox without a mod or to backup games because the dvd drive in your computer will not recognize an xbox game.
With a mod you can use up to a 120GB HD in the X-Box, if thats what you mean.
FTPing to/from your X-Box also needs a mod either with a custom dashboard such as Evox or one of the beta Executor BIOS images which have FTP built-in.
If you want to use your X-Box as an FTP server (a way to store and share files with other people) the safest way would be to use Linux on it so you arnt giving people access to your C drive and as such the ability to wipe everything from your X-Box.