ahhhh - got it...
For some reason the test server didn't have the option in phpmyadmin to choose pre or post 4.1 authentication. The production server has the option and 4.1+ is selected. I went ahead and ran:
mysql> UPDATE mysql.user SET Password = OLD_PASSWORD('newpwd')
-> WHERE Host = 'some_host' AND User = 'some_user';
mysql> FLUSH PRIVILEGES;
and restarted Apache - it works now....
Still don't understand why the production server has post 4.1 auth as an option and the test server doesn't.... Both Debian and both pretty new installs.
Wayne
