Hi llingf,
It's not hanging at all. It's running!
When you run ssh with the -D option it doesn't become a resident program. (e.g. Daemon)
TSch stated that option, so that you can view what the program is doing in a seperate session.
Just do a "/etc/init.d/sshd start"
Make sure you have another user besides root on your system
to log on with.
Make sure no rules are blocking communications like sillyVM said. With "/sbin/iptables -L" you can check whether you accept all communication (BAD Idea) or whether you are blocking ssh connections (inbound port 22 tcp)
Hope this helps you,
Ted Kraan