How would I go about securing a machine for shell account access?

For my regular servers that only I use, I do the following to keep them secure (from a fresh, minimal Debian squeeze installation):

• Disable services that aren't necessary
• Configure iptables to only allow necessary traffic in/out
• Lock down SSH so only certain users can log in with an SSH key on a port below 1024 that isn't 22
• Keep the systems updated
• Check logs regularly for irregularities

If you'd recommend I do anything else for a private one-user-only server, please let me know. They don't run HTTP daemons or anything. Anyway, back on topic:

I have a box set up like above. I'm planning on handing out shell accounts so some friends have a box to work on some OCW computer science courses with. They'll need things like GCC, Vim, Python, etc. I already have these installed. Of course, when handing out shells, I assume I need to take even more effort to secure the box to prevent abuse.

I plan on setting up user limits in /etc/security/limits.conf and using a grsecurity kernel. What else should I be doing? Should the users be placed in a jail? I'm comfortable using GNU/Linux, but I'm completely new to this.

I hope this question isn't too vague. Any help is really appreciated.

Thanks a lot.