SFTP broken after upgrade to 10.04

Since my upgrade to 10.04 (from 8.04) today my SFTP set up has totally failed. Before I was running SSH / SFTP on a non-standard port with vsftpd with two valid users. Now, though I can start vsftpd and login on port 21, I absolutely cannot use SFTP.

Attempting to login from the CLI shows everything as expected, I get prompted for my password, and then it immediately says "Connection Closed". I know I have the correct port open in my firewall (I'm connected via SSH).

Any ideas?

Here's a verbose output of the sftp connection:

Connecting to example.com...
OpenSSH_5.2p1, OpenSSL 0.9.8l 5 Nov 2009
debug1: Reading configuration data /etc/ssh_config
debug1: Connecting to example.com [12345] port 123.
debug1: Connection established.
debug1: identity file /Users/exam/.ssh/id_rsa type -1
debug1: identity file /Users/exam/.ssh/id_dsa type -1
debug1: Remote protocol version 2.0, remote software version OpenSSH_5.3p1 Debian-3ubuntu4
debug1: match: OpenSSH_5.3p1 Debian-3ubuntu4 pat OpenSSH*
debug1: Enabling compatibility mode for protocol 2.0
debug1: Local version string SSH-2.0-OpenSSH_5.2
debug1: SSH2_MSG_KEXINIT sent
debug1: SSH2_MSG_KEXINIT received
debug1: kex: server->client aes128-ctr hmac-md5 none
debug1: kex: client->server aes128-ctr hmac-md5 none
debug1: SSH2_MSG_KEX_DH_GEX_REQUEST(1024<1024<8192) sent
debug1: expecting SSH2_MSG_KEX_DH_GEX_GROUP
debug1: SSH2_MSG_KEX_DH_GEX_INIT sent
debug1: expecting SSH2_MSG_KEX_DH_GEX_REPLY
debug1: Host '[example.com]:123' is known and matches the RSA host key.
debug1: Found key in /Users/exam/.ssh/known_hosts:1
debug1: ssh_rsa_verify: signature correct
debug1: SSH2_MSG_NEWKEYS sent
debug1: expecting SSH2_MSG_NEWKEYS
debug1: SSH2_MSG_NEWKEYS received
debug1: SSH2_MSG_SERVICE_REQUEST sent
debug1: SSH2_MSG_SERVICE_ACCEPT received
debug1: Authentications that can continue: publickey,password
debug1: Next authentication method: publickey
debug1: Trying private key: /Users/exam/.ssh/id_rsa
debug1: Trying private key: /Users/exam/.ssh/id_dsa
debug1: Next authentication method: password
exam@example.com's password: 
debug1: Authentication succeeded (password).
debug1: channel 0: new [client-session]
debug1: Requesting no-more-sessions@openssh.com
debug1: Entering interactive session.
debug1: Sending subsystem: sftp
debug1: client_input_channel_req: channel 0 rtype exit-signal reply 0
debug1: client_input_channel_req: channel 0 rtype eow@openssh.com reply 0
debug1: channel 0: free: client-session, nchannels 1
debug1: fd 0 clearing O_NONBLOCK
Transferred: sent 1376, received 1960 bytes, in 0.3 seconds
Bytes per second: sent 4820.6, received 6866.5
debug1: Exit status -1
Connection closed

Thanks.