I had the same problem. I installed open ssh via installer - this didn't resolve it. I then uninstalled via installer then installed openssh via Cydia and all now works - I can now connect with Cyberduck, Fugu and Transit.
Openssh was originally installed via Pwnage.

The last time I got this error, the problem was related to the DCHP lease.
For a strange reason, I could use the Internet connection, but all the traffic from
the LAN was missing, I could ping an external server but another computer on
the network.
I recommend setting a manual address for the iPhone. I mean, if your range is
192.168.1.100 ~ 192.168.1.199 set the address to 192.168.1.199 to prevent duplicated addresses.