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I was able to replicate similar behavior by having the FTP account try to upload the reports to a path that is not writable by that ftp account as I suggested could be your issue.
Even though the fix to your problem would be to make the directory writable by that FTP account, I have logged this as BZ3128 since OOTP should error out rather than continuously try to upload over and over.
Another issue that might cause this for you is if you are trying to write to a drive and are not allowed by the ftp server due to Quota being over the limit or other possible scenerios where the root file system does not allow that ftp account to write to the directory seem to cause this.
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