I was getting an error logging into my FTP/SFTP server via WordPress when I tried to upgrade a plugin or two. It was saying the username / password was incorrect yet I was able to log in using an FTP client.
I checked all my config settings for both VSFTP and Apache but ended up restarting both services which made it work. I did not see any errors in VSFTP logs and no relevant entries in Apache. One those strange occurrences I guess.