I can confirm that I also had this issue. Uninstalling Net-SSH 2.8 and installing 2.7 fixed this.
BTW, thanks for saving my afternoon by posting this. -- You received this message because you are subscribed to the Google Groups "Capistrano" group. To unsubscribe from this group and stop receiving emails from it, send an email to capistrano+unsubscr...@googlegroups.com. To view this discussion on the web, visit https://groups.google.com/d/msgid/capistrano/c4c25bd4-6e54-49d8-a2f3-a0c01a9fb5ad%40googlegroups.com. For more options, visit https://groups.google.com/groups/opt_out.