It seemed to be the UsePAM setting that made it.
When UsePAM is returned to the default 'yes' everything is fine.
For some reason (a tutorial on slicehost.com :-)) I set the UsePAM to 'no' 
without knowing why.

Maybe this isn't the right place to explain why that happened but if
anyone would like to do that feel free to contact me.

-- 
motd disappears when using PasswordAuthentication in OpenSSH server
https://bugs.launchpad.net/bugs/348627
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