I am sharing a VPS with a friend where we are hosting a wordpress site. We both want to be able to edit the files via ssh or ftp from two different accounts.So is it safe if I chmod g+w the entire folder containing the wp site or would that create security problems? Is there a better / recommended way of doing that?
Editing WordPress files creates problems. What exactly is your end goal?
Well, I realize it may not be the Wordpressy way of doing things but I'm not used to using CMS and most of the time I feel much more comfortable using command line tools to edit a file instead of using the wp panel. I have no intention of messing around with wp's internals but there are a couple of custom function files and scripts that we will need to edit form time to time.Essentially we both have a background with Linux system administration and not much experience with web technologies in general so I guess it just feels natural to want to have permissions on stuff you might want to edit.
Anything like this you should include in a child theme (that way they don't get overwritten when you update), which you can upload via FTP. That way, you can avoid messing with folder permissions.