Yes, I would strongly suggest updating to a newer password hash function.
More:
http://stackoverflow.com/questions/7082091/why-is-the-old-mysql-password-function-considered-insecure

On Mon, Apr 9, 2012 at 4:48 PM, Phil Stracchino <ala...@metrocast.net>wrote:

> On 04/09/2012 09:48 AM, Domen Kožar wrote:
> > Hi,
> >
> > what version of mysql are you running? It seems you are running a
> > version with old password hashes, which changed in mysql 5.0. I'm not
> > sure what versions current almir mysql driver supports (have to check),
> > but mysql 4.1 is the minimum version that can be supported.
>
> The default MySQL configuration files shipped with almost every Linux
> distribution's MySQL packages, *even for MySQL 5.5*, still enable the
> old_passwords setting by default "for backward compatibility".  It makes
> me want to kick people.  The old style MySQL 3 password hashes were
> deprecated over ten years ago, because they were insecure THEN, and the
> attacks haven't gotten any weaker in the intervening ten years.
>
> There is really no excuse for it on the part of the packagers.  I
> suspect they will continue to enable old_passwords by default until
> Oracle completely removes old-style password hash support.
>
> </rant>
>
> --
>  Phil Stracchino, CDK#2     DoD#299792458     ICBM: 43.5607, -71.355
>  ala...@caerllewys.net   ala...@metrocast.net   p...@co.ordinate.org
>  Renaissance Man, Unix ronin, Perl hacker, SQL wrangler, Free Stater
>                 It's not the years, it's the mileage.
>
>
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