As described in: http://dev.mysql.com/doc/refman/5.1/en/access-denied.html
"""
If you cannot figure out why you get Access denied, remove from the user  table
all entries that have Host values containing wildcards (entries that contain
'%' or '_'  characters). A very common error is to insert a new entry with
Host='%'  and User='some_user', thinking that this enables you to specify
localhost to connect from the same machine. The reason that this does not work
is that the default privileges include an entry with Host='localhost'  and
User=''. Because that entry has a Host value 'localhost' that is more specific
than '%', it is used in preference to the new entry when connecting from
localhost! The correct procedure is to insert a second entry with
Host='localhost'  and User='some_user', or to delete the entry with
Host='localhost'  and User=''. After deleting the entry, remember to issue a
FLUSH PRIVILEGES statement to reload the grant tables.
"""