Quotas should work but the way I first see it is limit the size to the entire users home directory to 10mb. Of course /home needs to be a partition of its own because you will add a few variables to the /etc/fstab for the /home partition. Been a while since I created quotas.
/dev/hda2 /home ext2 defaults,usrquota,grpquota 1 1
Now another thought is this.
* Create a partition and mount it as ssh. In it create a directory for each user using thier name.
* chmod to allow only the owner to read and write. ' chmod 600 /ssh/username '
* Now create a softlink to thier ssh/username in thier home directory. ' ln -s /ssh/username /home/username/ssh '
* Edit /etc/fstab to add quotas to /dev/hd** /ssh partition like above.
* Setup quota limits.
* Unmount /ssh and remount
Hope this helps.