sftpsh is a shell designed to restrict a user to using the sftp subsystem of ssh.
This is a very simple program indeed. I have seen usage of it changed to restrict users to other applications such as cvs (subversion is in the making). I've been promised patch files for these but as to yet I have not received anything.
From version 1.0 to version 1.1 nothing much has been improved, except that I now make use of syslog, which makes troubleshooting much simpler.
Version 1.1.1 just changes the compiler to gcc instead of g++ and makes a note about chrooting in sftp-server.
To restrict a user to sftp is as simple as changing his shell, which is a trivial task.