OK, first shell/ftp/dns are completely different mechanisms.
The domain/subdomain entry is handled using the Add domain/subdomain button in the DH control panel. This is handled by the DH name servers and DNS. It may take a while before you can access the sub.domain.com in a web browser. Normally about 2/4 hours has been my experience.
When you create that subdomain you need to specify a user. That user can be setup to have Shell or FTP/sFTP access to the domain directory. While DNS is propagating and sub.domain.com doesn't resolve to the basic DreamHost "hello world" page, you can access the domain directory by using the DH server name instead of the ftp.sub.domain.com. Your file/webserver name will be something like foo.dreamhost.com where foo is the name of the file server listed for your account in the DH control panel (upper right Account Status).
You can upload with your FTP client but I don't think the WebFTP client will work unless you edit the settings to use the DH server and not your ftp.sub.domain.com entry since DNS isn't resolved yet.