I was finally able to figure out how to disable SSH access to a user account, but still allow SFTP to occur. Edit /etc/sshd_config, and add this section:
Match User sftponly
AllowTcpForwarding no
X11Forwarding no
ForceCommand /usr/libexec/sftp-server -l INFO
Replace sftponly with your short user name, then save the file and quit the editor.
Mac OS X Hints
http://hints.macworld.com/article.php?story=2007110914083783