It's worth a try. Comment out the tfto-server-name option and see what it does.
IIRC, if the phone just gets an IP address, it will try FTP to the address.
Didn't fix it.
Did it change the behavior of the TFTP data stream (is the phone getting Option 42 as a TFTP string, or is it still getting the IP-Address)?
Dhcp shows its getting the IP address. No difference in device behavior.