I need this, too!
I am working with mysql workbench. When I'm working within the model everything's fine until I try to forward engineer or synchronize my schema:
Because Workbench will add the foreign key constraints into the initial CREATE TABLE query, the server throws an error, because the engine is set to myISAM by default.
I have the ability to select innoDB as the default engine in workbench, but that'll only make a difference when I use the "create table" function in workbench (a dropdown will be preselected). Just running a plain "create table" without any parameters will create a myISAM table.
This tells you how to change the default storage engine, but I think that's something that has to be done on DreamHost's end.
After all, DreamHost clearly recommends to use innoDB: http://wiki.dreamhost.com/MyISAM_versus_InnoDB_tables
Again: Without this setting it's gonna be a pain in the butt to sync your server Schema with any Models that were created offline, at least when working with workbench.
I hope somebody from DreamHost reads this forum!