I have done this using several howto's and some of my own creativity.
One of the howto's was this
GIT-client in Plesk 11.5 - LinQhost
How to add new programs to a chrooted shell environment template?
You can't do this verbatim on an Ubuntu server.
I have written down most of the commands in a Word document, but there is some trial and error stuff in it..
In the end I managed to have a decent prompt with even "vi" working properly, git and several other stuff that is crucial...
If I find time I will try and write down a better howto that also works for Ubuntu.
The problem is that I don't get feedback from the very few users that are using it.
I don't get complaints either.
One user, a webmaster, didn't really want to go on our platform as he preferred to have a VPS with root access.
The website owner forced him to use our Plesk environment.
For him I did my best to create a chrooted shell where he could use git.
He didn't understand why I didn't just give him normal access as a user (which would be easier for me).
A chrooted shell doesn't stop people with bad intentions and enough skill, so be careful to whom you give access.
It's still better (from a security perspective) to give users chrooted shells than to give them access to the normal environment as a user.
Just don't overestimate it.
BTW...
Did you install the Git extension for Plesk?
Are your users missing stuff on that for which they need shell access?
If so, maybe some feedback can improve the quality of that extension.
As a system administrator I don't know enough to anticipate on their needs.