Anytime that you update Firefox, particularly a major update, as was 3.5, expect extensions to break. Extension developers sometimes (often) are behind the curve of Firefox updates. I always delay updates to give extension developers time to update to the new version. For example, I waited a good while before updating to 3.5, but still lost several extensions, including AutoCopy, which I cannot live without. I am dependent on that and a mouse button programmed to paste. The extension is still not 'officially' updated to work with 3.5, but an updated version is available on the developers site (a common occurrence), so I am back in business.
FireFTP IS updated for 3.5, but you may have to right click the tool bar, select customize, and drag the icon back into the toolbar.