asoscott you were absolutely correct. We were dealing with this exact issue on cPanel servers with similar specs (php 5.3). Switched to ProFTPd and our WordPress issues went away.
We have other non-cPanel servers (custom setups) that run vsftpd. They were so much faster and never had install/upgrade errors. Debugging plugins from wp-admin and watching the ftp messages come through was painful. Could not believe that it was a cPanel overhead issue. The only thing we could identify was a timeout and/or memory limit being reached that was set by cPanel. Never thought that it would be due to Pure-FTPd.
Thanks, it was helpful (very)…
Oh, and the upgrade was immediate and didn’t have complications for us either (second opinion).