What I ment was that this is for *wireless* and telnetting to localhost has nothing to do with wireless connections since it just issues the loopback interface. I would post this in the network forum but that does not matter, let's get back to the discussion, shall we?
Do you actually have a telnet daemon installed and running on your box? Cause if you don't, then you won't be able to connect to it via telnet.
I guess you have sshd running though, so you should be able to use ssh localhost
and connect to it, but still I do not know what you are out to do so maybe you need to use telnet and not ssh.