Why might the following grant statement fail to work?

grant all on kylie.* to 'kylie'@'localhost' identified by 'foo';

Here's the complete output.

$ mysql -A
Welcome to the MySQL monitor.  Commands end with ; or \g.
Your MySQL connection id is 63
Server version: 5.1.37 Source distribution

Type 'help;' or '\h' for help. Type '\c' to clear the current input statement.

mysql> show databases like 'kylie%';
+-------------------+
| Database (kylie%) |
+-------------------+
| kylie             | 
+-------------------+
1 row in set (0.00 sec)

mysql> grant all on kylie.* to 'kylie'@'localhost' identified by 'foo';
Query OK, 0 rows affected (0.02 sec)

mysql> exit
Bye

$ mysql -u kylie 
ERROR 1045 (28000): Access denied for user 'kylie'@'localhost' (using password: YES)

It seems that these grant options get me every time. I think I have them memorized and the docs seem to check out too, but they often fail to work. What am I missing?