Yeah, but sometimes it is the tires :) I'm not knee-jerking and saying it's NOT wp, but this is really implausible at this point and frankly, I'd put my time into getting login access back to phpmyadmin FIRST and then see what the hell is up with WordPress.
So if I cannot log into PHPMyAdmin, it screams an issue with MySQL. But what issue? For who? Why? It was a WordPress update. How could it effect MySQL?
Actually no. It screams an issue with your LOGIN :) Do you have a backup admin ID to log in with? Let's say your account name is 'roasted' and you always use that to SSH/FTP with. That ID should ALSO have access to log in to phpMyAdmin. If that doesn't work, it means either the combo is wrong (unlikely if you're able to login to SSH etc) or something's gacked with phpMyAdmin.
A WP upgrade goes like this:
1) You upload new files
2) Go to your admin side and it says "Hi! You need to upgrade your DB! Click here and I'll do it!"
3) You click and it edits the tables it has access to (limited by the ID/Password combo in your wp-config.php file)
Did you actually get to step 3? You never mentioned it. And even if you did... WP doesn't change your phpMyAdmin password. It updates your database via command line.
There's sand in your engine, and I don't think it's WP that poured it in, because ... it just doesn't make any sense for THAT to have happened.
When was the last time you logged into phpMyAdmin?
Honestly, I hate to say it, but if you have no posts, scrub the box and redo it. And start with 3.0 this time, not 2.9.2 and upgrade. Something's wrong, but you're the only one with the unholy combo of can't login to wp-admin + can't login to phpMyAdmin, and that's going to be really hard to debug unless we have your box :(