I used to do this all the time, and with my upgrade to debian armel/sid, it no longer works. I ssh into the Z from my (debian) desktop, and run an x program on the Z, such as xclock. Used to be, ssh and sshd were set up so that it would display on the desktop. It did that with titchy, angstrom, etc. I have poured over the /etc/ssh/ssh_config and /set/ssh/sshd_config files, and as far as I can tell they are identical on the two computers, and identical to my old config files from titchy. I can display programs on the Z that are running from the desktop just fine, but not the other way around. It seems that the DISPLAY environment variable does not get set, even though the sshd_config file says:
X11Forwarding yes
X11DisplayOffset 10
it is listening on port 22, protocol 2.
Anyone else? Any clues? It's more annoyance than anything else, but I would like to fix it.
SOLVED!
I had not bothered to configure /etc/network/interfaces, since dhclient brought up the link without it. All I needed to do was configure the loopback X interface (lo) and it now works. This makes sense because ssh pipes from the loopback interface to the remote server.