I would start by adding the mysql user back to the passwd file. This users is different and is used to control the mysql daemon.
to reset the lost password. do the following
1. stop the mysql server.
2. start the mysql with the following
mysqld_safe --skip-grant-tables &
3. connect to mysql
4. use mysql database
5. use the following query
update user set password=PASSWORD('new password') where user=root
6 Now flush the privileges and quit
7. stop mysql
8. Now restart mysql in normal mode
and that should get your going again.