I have an 3GS with jailbroken iOS4 installed. I wanted to change the passwords for the root and mobile accounts on my iPhone. I have tried almost every possibility to SSH into my iPhone, without any luck!

My solution to get it on the iPhone:
1) Download MobileTerminal-426.deb to your desktop (you may find it here)
2) Install "netatalk" by using Cydia
3) Reboot your iPhone (respring should do too)
4) Now your iPhone should show up in the Finder on your Mac
5) Connect to iPhone by clicking "Connect as"
6) Login as "root" with password "alpine" (these have not changed yet because we need to get Terminal on our iPhone first)
7) Copy .deb file to /root/var/root/Media/Cydia/AutoInstall
8) Reboot your iPhone TWICE (or reboot and respring afterwards)
9) Now MobileTerminal 4.26 should be in somewhere on your iPhone
10) Go ahead and change your password as described on several other tutorials on the web!

Have fun!!

Moved to 3GS forum because it has nothing to do with the iPhone 4. Please post in relevant forums to get the best visibility and results.

Most people I know use iSSH from Zingersoft from the AppStore for this now. You SSH to 127.0.0.1 to log onto your own iPhone (with OpenSSH installed and running)