Gents, Experiencing the following with Debian 6.0.2, which probably is the same for other openssh based installs.
I would like to have both types (sshkeys and password-based) of authentication be available.
Right now... if you have authorized_keys setup for account A, then folks are able to use ssh keys to connect, and if they dont, the method falls back to password authentication. Which is correct. However, if one tries to sftp A@host.com, then the session opens and quickly terminates.
Hope I explained this well :)