You need to multiply your speed, in seconds, by the delta time in seconds. So, if your update function is receiving the delta time in milliseconds, divide the milliseconds by 1000 to get your delta time in seconds. That, or you could fix your time step as Matias said, which you'll have to do anyway if you want to implement good multiplayer. The link he provided is very good.
On top of that stuff, your logic looks a bit off. So, you have a velocity variable that moves your ship based on delta time, but then when ship controls are pressed you don't even touch the velocity variable and just move your ship by hand ignoring delta time.