encrypting passwords etc..

Ok I got it working now, with the update and database connect etc.. thanks guys :) this is not a problem(yet), more a thought.. is it really necesary to encrypt passwords, I mean, what does it prevent, me from seeing them using mysql.exe ? :p I tried and it worked fine to almost all points.. worked with the user info update and so on.. but I seem to do something wrong and can't log back on since I encrypted the password... :p I used UPDATE users SET password=password('$password') but by some reason I can't seem to decrypt it on the login page.. any help would again be appreciated.. :) Hawk