Chroot SFTP Error and fix

So while adding another user to my hosting setup, I encountered this annoying bug:

Write failed: Broken pipe
Couldn't read packet: Connection reset by peer

After some hunting and trying of various things, I realized that Ubuntu's ssh is more picky than Debian 5's was.

I knew that you had to set the users home directory as owned by root, but each directory up the line has to be owned by root as well under Ubuntu, which I didn't realize. Wondering why no other users noticed they couldn't login, must have been because it's holiday season and none tried to do updates.