Replying to own post ... how sick is that!
Anyway ... didn't disclose what was done to resolve the issue of backups failing, sooooooo ...
Now this might not pertain to all ... server CentOS RHEL 6 PHP 5.3.3 with APC Moodle 2.6.highest and it has multiple Moodle sites (6). Can't upgrade PHP and upgrade Moodles this close to the end of school.
When the backups failed, checking apache error logs one would see a segment fault (never a good thing). Those are related to memory. In Googling the error seen, most articles concerning same/similar pointed to things like APC - sure enough ... increasing the memory allocated for APC and restarting apache service did the trick. The same might apply if running higher version of PHP with Zend's Opcache (built into PHP 5.4 ->).
The other item ... been working on this two days and this little thing learned the first day ...
run cron for the site - one of the first things cron does is a 'garbage collection' for PHP ... that relates to memory. Matter of fact, run the cron more than once so that one doesn't see any lag time during the gc phase of the cron job. By doing that, was able to complete the backups of a few of those larger courses in one of those sites.
Wonder IF the backup process it self shouldn't run php GC before it goes onto other things.
One thing certain ... Moodle only grows ... re-visit of config areas that affect things like backup needed on a regular basis. Getting to the end of the year now and those courses will be at their largest size. What tweaks there are made to apc, php, mysql, etc. may as well keep in affect cause next years usage will more than likely be more or at least heavier.
Such is tech ... forever and always ... onwards and upwards.
'spirit of sharing', Ken