After struggling with WebDAV I had to stop only to find out that phpicalendar requires that the account using WebDAV and phpicalendar must be one in the same. That won't work for dreamhost so I needed to do some alternate work..
Have fun
In short don't use WebDAV for this purpose. The folks over at phpicalendar already have a solution. Basically set up .htaccess using the panel at Dreamhost. From there log into your account using ssh, and modify the .htaccess file using the setup setup listed.
Options -Indexes Order Allow,Deny Allow from all <Files "publish.php"> Options +ExecCGI AuthUserFile /complete/path/to/phpicalendar/calendars/.htpasswd AuthName 'WebDAV-compatible upload.' AuthType Basic require valid-user </Files> <Files "*.ics"> Allow from all </Files>
Copy the file into the right place, set up your perms and that's it. UNTIL you get to posting...
Make sure that you subscribe to http://www.pointcircle.com/phpicalendar/calendars/publish.ical.php? and use the username and password you setup when you filled out the panel.