What is the proper way to set up the Apache document root in terms of privileges?
I disagree with Warner here, for a single site use /var/www, but for anything more complex I create subdirs in /srv/www
From your question the rough guide is:
aptitude install apache2chmod g+w /var/www-
adduser USER www-data(For each user)
Then have the users use SCP (please don't use FTP) to upload the files. If they want a GUI client then look at FileZilla.