My personal vote is "yay" to kftpd and "nay" to khttpd. There are a variety of simple HTTPD projects abound which could be ported to the Empeg. Plus displayserver does everything I need. It's a little heavy on the memory but I'd rather have that memory in a user application I can shutdown rather than in the kernel.

Just out of curiosity, how much memory is khttpd adding? I haven't had a chance to try it out.

The next thing I'd want to see is file upload to the Empeg from kftpd. But my guess is that's on your list anyway.