Ubuntu 10.04.4 LTS

I'm trying to chroot the user 'sam'. According to all the tutorials out there this should work, but apparently I'm still doing something wrong.

The user:

sam:x:1005:1006::/home/sam:/bin/false

I changed /etc/ssh/sshd_config like this (at the bottom of the file):

#Subsystem sftp /usr/lib/openssh/sftp-server
# CHROOT JAIL
Subsystem sftp internal-sftp
Match group users
    ChrootDirectory %h
    ForceCommand internal-sftp
    AllowTcpForwarding no

I added sam to the users group:

$groups sam
sam : sam users

I changed the permissions for sam's home folder:

$ ls -la /home/sam
drwxr-xr-x 11 root root  4096 Sep 23 16:12 .
drwxr-xr-x  8 root root  4096 Sep 22 16:29 ..
drwxr-xr-x  2 sam  users 4096 Sep 23 16:10 awstats
drwxr-xr-x  3 sam  users 4096 Sep 23 16:10 etc
...
drwxr-xr-x  2 sam  users 4096 Sep 23 16:10 homes
drwxr-x---  3 sam  users 4096 Sep 23 16:10 public_html

I restarted ssh and now sam can't log in with SFTP. The session is created, but also closed immediately:

Sep 24 12:55:15 ... sshd[9917]: Accepted password for sam from  ...
Sep 24 12:55:15 ... sshd[9917]: pam_unix(sshd:session): session opened for user sam  by (uid=0)
Sep 24 12:55:16 ... sshd[9928]: subsystem request for sftp
Sep 24 12:55:17 ... sshd[9917]: pam_unix(sshd:session): session closed for user sam

Cyberduck says Unexpected end of sftp stream. and other clients give similar errors.

What did I forget / what is going wrong?

Thanks!