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According to the log file:

Setting up openssh-server (1:5.3p1-3ubuntu4) ...
Creating SSH2 RSA key; this may take some time ...ssh-keygen: error while 
loading shared libraries: libncurses.so.4: cannot open shared object file: No 
such file or directory
dpkg: error processing openssh-server (--configure):
 subprocess installed post-installation script returned error exit status 127

Is the ncurse package installed on the system?

** Changed in: openssh (Ubuntu)
   Importance: Undecided => Low

** Changed in: openssh (Ubuntu)
       Status: New => Incomplete

-- 
package openssh-server 1:5.3p1-3ubuntu4 failed to install/upgrade: subprocess 
installed post-installation script returned error exit status 127
https://bugs.launchpad.net/bugs/666152
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