That behavior is a result of how "magic quotes" are handled by WordPress, and can be addressed a couple of ways.
Dreamhost's versions of PHP have magic_quotes_gpc set differently. PHP4 is setup with magic_quotes_gpc=off, while PHP5 is setup with magic_quotes_gpc=on.
While there other ways to "fix" what you are seeing, the easiest thing to try first, if there is no reason you must use PHP5, is to go to the Manage Domains screen of the Control Panel, click the "Edit" link next to the name of the domain where your WordPress is installed, and modify the resultant form by selecting the Radio button to use PHP4 with your domain. After submitting that form, and the change has taken place, test your WordPress and see if the problem is resolved.
Bear in mind that you may still need to "edit" certain existing entries, depending upon what actually ended up in your database as far as the "quotes" go. Good Luck!