createused + createdb problems with passwords

Hello,

I have created PostgreSQL databases and users a number of times, but
I'm having trouble with that on a new server with Postgresql 7.3.4.

I am trying to create a DB user (createuser) and a database itself
(createdb):

bash-2.05b$ whoami
postgres

bash-2.05b$ tail -5 ~postgres/data/pg_hba.conf
host all all MY.IP.IS.HERE 255.255.255.255 md5

bash-2.05b$ createuser -h MY.IP.IS.HERE otis
Shall the new user be allowed to create databases? (y/n) n
Shall the new user be allowed to create more new users? (y/n) n
Password:
psql: FATAL: Password authentication failed for user "postgres"

createuser: creation of user "otis" failed

-- Question: what password am I supposed to enter here?
-- I suppose it's the postgres user's _DB_ password - but how do I know
what it is? I didn't set it.

bash-2.05b$ createdb -h MY.IP.IS.HERE simpydev
Password:
psql: FATAL: Password authentication failed for user "postgres"

createdb: database creation failed

-- Question: what password am I supposed to enter here?

Thank you,
Otis