Mr. RAM Has written an excellent article to setup virtual users in FTP server.
Virtual hosting is a method to run one instance of a service to host multiple users with their own authentication, isolation and security. You can do virtual hosting in web servers using Apache / IIS. The same applied to mail server hosting in qmail with vpopmail configuration.
I attempted to do the same with ftp servers.
OS : Rhel5.2
Ftp server : Vsftpd
Authentication : Mysql database with pam_mysql module.
COMPLETE STEP BY STEP INSTRUCTIONS are AVAILABLE IN GEEKSPEAKS.NET