How are you setting your password in MySQL?
You have probably allready seen this, but...

If you change a password by using SET PASSWORD, INSERT, or UPDATE, you must encrypt the password using the PASSWORD() function. If you do not use PASSWORD() for these statements, the password will not work. For example, the following statement sets a password, but fails to encrypt it, so the user will not be able to connect afterward:

mysql> SET PASSWORD FOR 'abe'@'host_name' = 'eagle';
Instead, set the password like this:
mysql> SET PASSWORD FOR 'abe'@'host_name' = PASSWORD('eagle');

The PASSWORD() function is unnecessary when you specify a password using the GRANT statement or the mysqladmin password command, both of which automatically use PASSWORD() to encrypt the password.