Are you using a distribution of Linux or FreeBSD, and what is the OS version?
What is your version of cPanel&WHM? It will help if you could please provide us with the output from the following command, entered via root SSH access:
Which FTP server software is being used? For example, are you using ProFTPD or Pure-FTPd? This can be found using the following command:
# grep -H '' /usr/local/cpanel/version /var/cpanel/envtype
Is there difficulty using the normal cPanel interface to create and manage FTP accounts? I'm not aware of the "ftpupdate" script having use as an aid in FTP account creation; is there a reason why this script is being used in the manner described?
# /scripts/setupftpserver --current