Unable to connect to database using localhost

Anyone come across this:

WordPress can’t connect to its database when the host name is set in wp-config to the default ‘localhost’.

However, I can connect to the MySQL server with that host name and the same username/password on the same machine, using both Sequel Pro and MySQL Administrator, so I know the database server is running, and the user details are correct.

If I change the hostname in the config file to ‘127.0.0.1’, WordPress can connect to the database, and everything appears to be working OK, except that when I look at the WordPress blog on another machine, a lot of the links to files appear to be broken. I see the blog front page, for example, but the CSS stylesheet[s] are not linked properly, so I just see the raw unstyled HTML. All the text links on the page appear to point to ‘http://127.0.0.1/……’

Any idea what might be going wrong? I imagine the two issues are linked, but maybe they aren’t…

My test machine (the blog will eventually be moved to a dedicated server):

MacBook Pro
MacOS 10.5.7
MySQL 5.1.36 (x86 64bit, from MySQL.com)
PHP 5.2.8 (Apple standard install)

Alex
Goldsmiths University of London
London UK