Sorry, I assumed wu-ftpd. Anyway I just decided to try proftpd since so many ppl were talking about it.
I just downloaded the rpm, installed and it, made the above changes in /etc/xinetd.d/proftpd and tried. But could not login. ( Got a connection closed message ).
Did a little bit of work and found /etc/proftpd.conf should have something like
insted of default type standalone.
After fixing this I could login.
I am not sure about any other feature of proftp. Try this and if it works fine!.
PS: It is disable=no NOT disabled.