Our dog became manic on prednisone, and drank water obsessively until he ran around dribbling urine uncontrollably all over the house 24/7.
He also acted completely psychotic. We had to greatly lower his dose.
Some dogs, just like people, have some odd reactions to steroids. I've seen dogs who just "turn off" and stare at a corner all day long. I reacted in a similar way when I had to take them for a month - complete lack of concentration, and I'd find myself staring off into space. The lights were on but nobody was home. LOL!
If the steroids are helping the skin condition, ask your vet if you can try a lower dose and see if the side effects go away. There are other meds you can try, but steroids are usually the first thing to try for a number of reasons including their low cost. I don't like to keep my dogs on steroids long-term either. Generally, once the skin problem is cleared up, that's it for the steroids until the following year when another skin problem crops up.