Ubuntu Security :: SSH Server - Username / Password Encrypted

There was a recent thread in this forum regarding capturing of SSH passwords via the use of wireshark. The thread subject was closed, which is a decision that I both agree with as well as agree with the reasoning behind. The thread, however, raised a point of curiosity and concern that I would like to ask about. Quoting from a the book, SSH, The definitive guide,

The client authenticates you to the remote computer's SSH server using an encrypted connection, meaning that your username and password are encrypted before they leave the local machine. The SSH server then logs you in, and your entire login session is encrypted as it travels between client and server. Because the encryption is transparent, you won't notice any differences between telnet and the telnet-like SSH client.

I was under the impression that SSH was impervious to this type of eavesdropping, and quite frankly I take great comfort in that idea. I personally, only allow RSA keys for SSH access and (hopefully) avoid this problem (?) as a result. Does SSH really have a vulnerability in that the authentication is sent via plain text? How to ensure the security of SSH and not on anything that could be considered a how to 'crack' it.