Vertical space around \vdots in xymatrix

The same with a simple array:

\documentclass{article}
\usepackage{amsmath}
\begin{document}

\[\begin{array}{c}
 B_t(\zeta)\\\vrule\\[-2pt]
 \vdots    \\\vrule\\
 B_2(\zeta)\\\vrule\\
 B_1(\zeta)\\\vrule\\
 F(\zeta)  \\\vrule\\
 F 
\end{array}\]

\end{document}

Define a new \myvdots instead of \vdots as follows:

\documentclass[10pt,a4paper,twoside]{article}
\usepackage{amsmath, amssymb}
\usepackage{amsthm}
\usepackage[all]{xy}
\newcommand{\myvdots}{\raisebox{.006\baselineskip}{\ensuremath{\vdots}}} 


\begin{document}

\[
\xymatrix @R=1pc @C=2.5pc{
B_t(\zeta) \ar@{-}[d] \\
\myvdots \ar@{-}[d] \\
B_2(\zeta) \ar@{-}[d] \\
B_1(\zeta) \ar@{-}[d] \\
F(\zeta) \ar@{-}[d] \\
F }
\]

\end{document}

And the effective is

By the way, for xy, please use the neat codes \usepackage[all]{xy}.

Playing with both optional arguments of \raisebox you can control the white space above and below the vdots:

\documentclass[10pt,a4paper,twoside]{article}
\usepackage{amsmath, amssymb}
\usepackage{amsthm}
\input xy
\xyoption{all}

\begin{document}

\[
\xymatrix @R=1pc @C=2.5pc{
B_t(\zeta) \ar@{-}[d]\\
\raisebox{0pt}[0.9\height][0.3\height]{$ \vdots $} \ar@{-}[d] \\
B_2(\zeta) \ar@{-}[d] \\
B_1(\zeta) \ar@{-}[d] \\
F(\zeta) \ar@{-}[d] \\
F }
\]
\end{document}