Unable to connect to any of the specified MySQL hosts. when trying to connect mysql

im using go daddy vps , installed mysql configured /etc/my.cnf to look like this:

[mysqld]
user=mysql
datadir=/var/lib/mysql
socket=/var/lib/mysql/mysql.sock
port=3306
# bind-address=1xx.1xx.1xx.148
bind-address=1xx.1xx.1xx.148
skip-networking

# Default to using old password format for compatibility with mysql 3.x
# clients (those using the mysqlclient10 compatibility package).
old_passwords=1

# Disabling symbolic-links is recommended to prevent assorted security risks;
# to do so, uncomment this line:
# symbolic-links=0

[mysqld_safe]
log-error=/var/log/mysqld.log
pid-file=/var/run/mysqld/mysqld.pid

then when i see in /var/log/mysql.log i see the mysql started right :

120113 03:58:59  mysqld started
120113  3:58:59 [Warning] option 'max_join_size': unsigned value 18446744073709551615 adjusted to 4294967295
120113  3:58:59 [Warning] option 'max_join_size': unsigned value 18446744073709551615 adjusted to 4294967295
120113  3:58:59  InnoDB: Started; log sequence number 0 43665
120113  3:58:59 [Note] /usr/libexec/mysqld: ready for connections.
Version: '5.0.77'  socket: '/var/lib/mysql/mysql.sock'  port: 3306  Source distribution

but when i do :

/usr/sbin/lsof -i:3306

i dont see any thing. when i do :

 netstat -a |grep LISTEN

tcp        0      0 localhost.localdomain:smtp  *:*                         LISTEN
tcp        0      0 *:http                      *:*                         LISTEN
tcp        0      0 *:ssh                       *:*                         LISTEN
tcp        0      0 *:https                     *:*                         LISTEN
unix  2      [ ACC ]     STREAM     LISTENING     244331015 /var/run/saslauthd/mux
unix  2      [ ACC ]     STREAM     LISTENING     247310795 /var/lib/mysql/mysql.sock

so i see somekind of mysql socked listen ... but when i try to connect from my Toad to the remote server im getting :
Unable to connect to any of the specified MySQL hosts.

im connecting to the mysql root user . to my application db in port 3306. also i found in the net allot of post saying to remove the skip-networking. but when i do so . im getting this error when i try to start the Db :

120113 14:46:36  mysqld started
120113 14:46:36 [Warning] option 'max_join_size': unsigned value 18446744073709551615 adjusted to 4294967295
120113 14:46:36 [Warning] option 'max_join_size': unsigned value 18446744073709551615 adjusted to 4294967295
120113 14:46:36  InnoDB: Started; log sequence number 0 43665
120113 14:46:36 [ERROR] Can't start server: Bind on TCP/IP port: Cannot assign requested address
120113 14:46:36 [ERROR] Do you already have another mysqld server running on port: 3306 ?
120113 14:46:36 [ERROR] Aborting

120113 14:46:36  InnoDB: Starting shutdown...
120113 14:46:37  InnoDB: Shutdown completed; log sequence number 0 43665
120113 14:46:37 [Note] /usr/libexec/mysqld: Shutdown complete

120113 14:46:37  mysqld ended

and i do not have any mysql runnning on this port or any mysql running at all ..
what is wrong here ?