ERROR 1045 (28000): Access denied for user 'root'@'localhost' (using password: YES)

Somehow my root account lost its 'ALL PRIVILEGES' option, and instead was listing all individual privileges when running

show grants;

As root instead of:

+----------------------------------------------------------------------------------------------------------------------------------------+
| Grants for root@localhost                                                                                                              |
+----------------------------------------------------------------------------------------------------------------------------------------+
| GRANT ALL PRIVILEGES ON *.* TO 'root'@'localhost' IDENTIFIED BY PASSWORD '*76854B38A7923CC05E7857229F508E66E89D69AD' WITH GRANT OPTION |
+----------------------------------------------------------------------------------------------------------------------------------------+
1 row in set (0.00 sec)

This was preventing me from assigning all privileges to *.* to other users....
The solution for me (in OSX 10.6.8) was to run in terminal:

mysql_upgrade

which rebuilt my grants table, then after logging into mysql as root, retrying the grant cmd:

GRANT ALL PRIVILEGES ON *.* TO 'myuser'@'localhost'