As it hasn't been explicitly mentioned, sshd is by default very strict on premissions on for the authorized_keys files. So, if authorized_keys is writable for anybody other than the user or can be made writable by anybody other than the user, it'll refuse to authenticate (unless sshd is configured with StrictModes no)
What I mean by "can be made writable" is that if any of the parent directories are writable for anybody other than the user, users permitted to modify those directories can start modifying permissions in such a way that they can modify/replace authorized_keys.
This will not show up with ssh -v, it'll show up in the logs emitted by sshd (typically put in /var/log/secure or /var/log/auth.log, depends on distro and syslogd configuration).
From man sshd(8):
Lists the public keys (RSA/DSA) that can be used for logging in
as this user. The format of this file is described above. The
content of the file is not highly sensitive, but the recommended
permissions are read/write for the user, and not accessible by
If this file, the ~/.ssh directory, or the user's home directory
are writable by other users, then the file could be modified or
replaced by unauthorized users. In this case, sshd will not
allow it to be used unless the StrictModes option has been set to