Looks to be a "No supported key exchange algorithms [preauth]" problem.

Regenerating the host RSA key with "ssh-keygen -t rsa -f
/etc/ssh/ssh_host_rsa_key" fixes the issue

Log of failure (pre-keygen) on host:
$ sudo /usr/sbin/sshd -p 2222 -D -d -d -d -e
debug2: load_server_config: filename /etc/ssh/sshd_config
debug2: load_server_config: done config len = 37
debug2: parse_server_config: config /etc/ssh/sshd_config len 37
debug3: /etc/ssh/sshd_config:1 setting PermitRootLogin yes
debug3: /etc/ssh/sshd_config:2 setting LogLevel DEBUG3
debug1: sshd version OpenSSH_6.6, OpenSSL 1.0.1f 6 Jan 2014
debug3: Truncated RSA1 identifier
debug1: key_parse_private2: missing begin marker
debug1: key_parse_private_pem: PEM_read_PrivateKey failed
debug1: read PEM private key done: type <unknown>
debug3: Truncated RSA1 identifier
debug3: Could not load "/etc/ssh/ssh_host_rsa_key" as a RSA1 public key
Could not load host key: /etc/ssh/ssh_host_rsa_key
debug3: Truncated RSA1 identifier
debug1: key_parse_private2: missing begin marker
debug1: key_parse_private_pem: PEM_read_PrivateKey failed
debug1: read PEM private key done: type <unknown>
debug3: Truncated RSA1 identifier
debug3: Could not load "/etc/ssh/ssh_host_dsa_key" as a RSA1 public key
Could not load host key: /etc/ssh/ssh_host_dsa_key
debug3: Truncated RSA1 identifier
debug1: key_parse_private2: missing begin marker
debug1: key_parse_private_pem: PEM_read_PrivateKey failed
debug1: read PEM private key done: type <unknown>
debug3: Truncated RSA1 identifier
debug3: Could not load "/etc/ssh/ssh_host_ecdsa_key" as a RSA1 public key
Could not load host key: /etc/ssh/ssh_host_ecdsa_key
debug3: Truncated RSA1 identifier
debug1: key_parse_private2: missing begin marker
debug1: key_parse_private_pem: PEM_read_PrivateKey failed
debug1: read PEM private key done: type <unknown>
debug3: Truncated RSA1 identifier
debug3: Could not load "/etc/ssh/ssh_host_ed25519_key" as a RSA1 public key
Could not load host key: /etc/ssh/ssh_host_ed25519_key
debug1: rexec_argv[0]='/usr/sbin/sshd'
debug1: rexec_argv[1]='-p'
debug1: rexec_argv[2]='2222'
debug1: rexec_argv[3]='-D'
debug1: rexec_argv[4]='-d'
debug1: rexec_argv[5]='-d'
debug1: rexec_argv[6]='-d'
debug1: rexec_argv[7]='-e'
debug3: oom_adjust_setup
Set /proc/self/oom_score_adj from 0 to -1000
debug2: fd 3 setting O_NONBLOCK
debug1: Bind to port 2222 on 0.0.0.0.
Server listening on 0.0.0.0 port 2222.
debug2: fd 4 setting O_NONBLOCK
debug3: sock_set_v6only: set socket 4 IPV6_V6ONLY
debug1: Bind to port 2222 on ::.
Server listening on :: port 2222.
debug3: fd 5 is not O_NONBLOCK
debug1: Server will not fork when running in debugging mode.
debug3: send_rexec_state: entering fd = 8 config len 37
debug3: ssh_msg_send: type 0
debug3: send_rexec_state: done
debug1: rexec start in 5 out 5 newsock 5 pipe -1 sock 8
debug3: recv_rexec_state: entering fd = 5
debug3: ssh_msg_recv entering
debug3: recv_rexec_state: done
debug2: parse_server_config: config rexec len 37
debug3: rexec:1 setting PermitRootLogin yes
debug3: rexec:2 setting LogLevel DEBUG3
debug1: sshd version OpenSSH_6.6, OpenSSL 1.0.1f 6 Jan 2014
debug3: Truncated RSA1 identifier
debug1: key_parse_private2: missing begin marker
debug1: key_parse_private_pem: PEM_read_PrivateKey failed
debug1: read PEM private key done: type <unknown>
debug3: Truncated RSA1 identifier
debug3: Could not load "/etc/ssh/ssh_host_rsa_key" as a RSA1 public key
Could not load host key: /etc/ssh/ssh_host_rsa_key
debug3: Truncated RSA1 identifier
debug1: key_parse_private2: missing begin marker
debug1: key_parse_private_pem: PEM_read_PrivateKey failed
debug1: read PEM private key done: type <unknown>
debug3: Truncated RSA1 identifier
debug3: Could not load "/etc/ssh/ssh_host_dsa_key" as a RSA1 public key
Could not load host key: /etc/ssh/ssh_host_dsa_key
debug3: Truncated RSA1 identifier
debug1: key_parse_private2: missing begin marker
debug1: key_parse_private_pem: PEM_read_PrivateKey failed
debug1: read PEM private key done: type <unknown>
debug3: Truncated RSA1 identifier
debug3: Could not load "/etc/ssh/ssh_host_ecdsa_key" as a RSA1 public key
Could not load host key: /etc/ssh/ssh_host_ecdsa_key
debug3: Truncated RSA1 identifier
debug1: key_parse_private2: missing begin marker
debug1: key_parse_private_pem: PEM_read_PrivateKey failed
debug1: read PEM private key done: type <unknown>
debug3: Truncated RSA1 identifier
debug3: Could not load "/etc/ssh/ssh_host_ed25519_key" as a RSA1 public key
Could not load host key: /etc/ssh/ssh_host_ed25519_key
debug1: inetd sockets after dupping: 3, 3
Connection from 192.168.56.1 port 53307 on 192.168.56.101 port 2222
debug1: Client protocol version 2.0; client software version OpenSSH_6.6.1p1 
Ubuntu-2ubuntu2
debug1: match: OpenSSH_6.6.1p1 Ubuntu-2ubuntu2 pat OpenSSH* compat 0x04000000
debug1: Enabling compatibility mode for protocol 2.0
debug1: Local version string SSH-2.0-OpenSSH_6.6p1 Ubuntu-2ubuntu1
debug2: fd 3 setting O_NONBLOCK
debug2: Network child is on pid 3095
debug3: preauth child monitor started
debug3: privsep user:group 117:65534 [preauth]
debug1: permanently_set_uid: 117/65534 [preauth]
debug1: list_hostkey_types:  [preauth]
No supported key exchange algorithms [preauth]
debug1: do_cleanup [preauth]
debug3: mm_request_receive entering
debug1: do_cleanup
debug1: Killing privsep child 3095

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https://bugs.launchpad.net/bugs/708493

Title:
  Can't login anymore: Read from socket failed: Connection reset by peer

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