Ok, hoping someone can help me out with this issue:

All of a sudden I cannot change directories when I am connected via SFTP with my iPhone 3G (2.2.1)

It was working fine earlier today. I connected at home transferred some files and then went to work connected there and transferred a couple more files.

I got home, and I can connect, but I always get a timeout when trying to change directories or download files.

I can upload and delete files in the home directory (which is default).

The only thing that has changed on my phone is that I installed backgrounder (which I have uninstalled since).

I have tried fixing the permissions with BossPrefs
I have deleted my keys and regenerated,
I have completely re-installed OpenSSH
I have rebooted my phone
I have tried multiple SFTP clients
I can connect and change directories using the iTunnel suite

Thanks