Received new unit today, and after several more hours of experimentation, I have come to the conclusion that there was nothing actually wrong with either of the two units I have tried, but I think I have found some quirks with the CloudFTP that relate to file sizes and apps used. These are my observations:
1. Uploading of large files such as photographs (over about 850 KB) from the iPad to an external HD were likely to run into the ftp error messages when using Goodreader. Smaller files uploaded without a problem.
2. Using PhotoSync solved the problem with large file uploads for some, but not all of the external storage devices I tried. I had the most luck with usb cardreaders, loading to SDHC cards. Uploading to these devices seems flawless, no matter how large the file size. However, the same uploads to my Western Digital external drives was another story. I still have not solved the problem for my two newer drives (500 GB and 1 TB). The upload starts, but then quits within half a second with the message "An error occurred when uploading to FTP. Please check your connection." Interestingly, when I tried it with one of my really old WD drives (at lease 6 years old) - the uploads went through without a hitch.
3. The larger photo files would not load even to the SDHC cards if I tried to upload them through Goodreader instead of PhotoSync.
In conclusion, I think that there is something about uploading large file sizes (over about 850 KB) from the iPad to an external storage device which causes problems depending on the type of external device used as well as the app used.
I'm fine with using SDHC cards for now and I'm really happy to have found a method to upload my large photography files from the iPad when we leave on vacation next week. Each photo is about 3 MB, so a 32 GB SDHD card will hold close to 10,000 images - way more than enough space. I'm taking an extra card along for video - a 32 MB card will hold about 2 hours of HD video. So this is an acceptable situation.
Maybe this will be addressed in a future firmwire update, or will be solved when CloudFTP releases their own app.
Doug