You are running a version of OpenSSH which is older than 3.1. Versions prior than 3.1 are vulnerable to an off by one error that allows local users to gain root access, and it may be possible for remote users to similarly compromise the daemon for remote access. In addition, a vulnerable SSH client may be compromised by connecting to a malicious SSH daemon that exploits this vulnerability in the client code, thus compromising the client system.
Upgrade to OpenSSH 3.1 or apply the patch for prior versions. (See: http://www.openssh.org)