The problem consists of the FTP command PORT in conjunction with Windows Firewall on Windows Vista and Windows 7. The firewall simply closed this connection which close the socket and the ftp-transfer fails.
This problem is especially troublesome for web developers that are using the java powered IDEs Eclipse and Netbeans. Since a simple upgrade to Java 7 will immediately cause the ftp transfers to stop working and the only remedy is to either close down (turn off) your firewall or downgrade to Java 6. Explicitly allowing the Javaw.exe process through the firewall did not solve the issue for me.
Oracle has been alerted of the issue on the 11th of August 2011, but unfortunately gave the bug a 4-Low in priority, which probably means that they don’t see the magnitude of the problem and we won’t see a fix for this issue anytime soon.