well, if you want to use OSX's built-in ftp sharing, then yes, you'll have to create a new user, but this user will have access to your entire computer, albeit read-only. certain things in *your* home directory won't be readable, but for the most part they'll have free access to whatever's on there. now you probably don't want to take away their read access for everything outside of their home directory, because then there'll be trouble when they try to log in.
so you can either change your ftp server's preferences (i'm not sure how to do this) or use another ftp server. with another ftp server, you should be able to set up the read/write permissions you want within a single directory (in which they can build) and maybe not even have to set up another OSX user.
here's a quick search on versiontracker's OSX section:
http://www.versiontracker.com/mp/new...mp;x=0&y=0
i don't have any personal experience with these, so i can't help beyond that. good luck!