I'm using my HTC Dream to control my home computer via SSH. But the interaction is very slow. I think this is because it uses the secure algorithm (aes256-ctr). If this is true, how do I make
sshd use the simplest secure algorithm?
You can change the ciphers used by modifying the config file at /etc/ssh/sshd_config.
Check out the man pages and you should be able to set the cipher to whichever you'd prefer. We've found blowfish to be the fastest.
You can also turn on compression if you'd like to try to speed up your connection.
While the HTC Dream is quite old it should easily suffice to encode/decode data with speeds of a simple SSH session. The slow interaction is rather caused by the higher latency in cellular networks. Any keypress will have to travel to the server and then get echoed back to the client.
Unless SSH is still slow when you connect through Wi-Fi, changing the cipher suite will not help.
Are you talking about initial connections? or while communicating with the unit AFTER connecting?
If you haven't either assigned a DNS name to that IP address, or at least giving a name to the IP addr in BOTH device's /etc/hosts file, then you'll experience a delay when connecting since the machines are looking up the addresses to get names.
Delays after connecting could be network load related, packet travel path related, device load related... pick one...