The reason for using SFTP over USB is speed and convenience. MTP is unsatifactory, and transfering files over WiFi is slow.
For those of you who have my setup (GSM Galaxy Nexus with Cyanogenmod 9 RC2 or later) here's how to manage files on your device with maximum convenience and speed.
- Install DigiSSHd (and DigiControl) on phone
connect phone to PC via USB cable
On phone, go to Settings > Wireless & Networks > More... > Tethering and portable hotspot >
check "Enable USB tethering"
Done. Exit settings.
The first time setting up DigiSSHd on phone, open DigiSSHd and enable it (so it becomes active).
Since I'm running KDE, I use Dolphin. Here's how to manage files on my phone with Dolphin. (You could do the same with Nautilus, but the syntax may be different.)
This assumes the default port of 2222. You can change password, port, etc. in DIgiSSHd settings.
Once it is set up, establishing the connection is super easy. And managing files via a real file manager is way superior to using MTP.
See more here: