One thing I would definitely recommend rather than setting up an FTP is using CVS to synchronize your project. The way it works is someone sets up a CVS repository which holds the centralized code/asset base for the project.
Then when someone updates a file locally, they "check in" their changes with the server. It will also recognize any conflicts in changes if two people on the project change the same line of code, etc.
If you have more than a couple of people working on your mod/game, you definitely should look into it. It's pretty easy to setup, and using a client like Tortoise CVS makes it easy to use.
Some sort of asset/code management is used professionally in the industry...whether it's CVS or Perforce or AB (personally here at EALA we are using Perforce for code management and Alienbrain for asset management). For a small project, though, stick with CVS, especially since it's free.
However, I can speak from experience that working on a project with a couple of coders is MUCH easier if you have a CVS server setup. I've done one side project without CVS, and I've done a few with it, and it definitely helps you accomplish a lot more.