Are you running update 2 of the RCLI and which are you using (appliance / Windows install / Linux install). The above command is Ok for me (windows install) and likewise vmkfstools -i to clone.
I have this same problem when downloading from ESXi. I can download small files, but large files end with a nondescript I/O error. I can download files with the RCLI and the web based datastore browser, as well as through unsupported SSH.
Do you still have the "IO error occured" via the Datastore browser?