I have the same issue, cannot login with WinSCP (which I was able to before) to the device on 4.1 (iPod Touch 3G).
Finally got it to work.
OpenSSH on 4.1 seems to be the issue. Using SBSettings, I have restarted the SSH daemon a couple of times. Trying to connect after a reset then eventually worked. You should try it out.
Good luck!
Last edited by 4h34d; 10-26-2010 at 08:57 AM.
Reason: Automerged Doublepost
no problem here, worked right away. Make sure you're using the right wifi address.
Also I'd suggest trying ifunbox since it's faster going through usb. If ifunbox says you are jailed then just install afc2add from cydia but I think that's now native in the jailbreak anyway.