The following is what my /etc/sshd_config file looks like. Yours should look the same or similar:
# This is the ssh server system wide configuration file. Port 22 ListenAddress 0.0.0.0 HostKey /etc/ssh_host_key RandomSeed /etc/ssh_random_seed ServerKeyBits 768 LoginGraceTime 600 KeyRegenerationInterval 3600 PermitRootLogin yes IgnoreRhosts yes StrictModes yes QuietMode no FascistLogging yes CheckMail no IdleTimeout 3d X11Forwarding no PrintMotd no KeepAlive yes SyslogFacility DAEMON RhostsAuthentication no RhostsRSAAuthentication no RSAAuthentication yes PasswordAuthentication no PermitEmptyPasswords no UseLogin no
The important points to note are that password authentication is disabled as are all of the "R" services. I have also turned off mail checking and the message of the day as they can confuse pppd on the client side. I still allow root login, but as this can only be done with a key, it is adequately safe.