This is one of the most annoying and frustrating problems I have run into lately. This supposed security fix makes vsftp simply unusable after upgrading to Ubuntu 12.04 from 10.04. No amount of cajoling or messing with options will get it working again.
The fix is pretty easy though, just copy/paste these lines into a terminal. It will update your /etc/vsftpd.conf that stopped working after you upgraded.
This has been tested and works on Ubuntu 12.04
dpkg -i vsftpd_3.0.2-14_amd64.deb
echo "allow_writeable_chroot=YES" >> /etc/vsftpd.conf
echo "seccomp_sandbox=NO" >> /etc/vsftpd.conf
service vsftpd reload
It seems the link above is broken. Try one of these, depending on your architecture: