It is very possible that you have been
compromised. First, shut off telnet and ftp!!!
Next, check out:
http://www.cert.org/tech_tips/root_compromise.html
...and following these procedures, you should
be able to determine the level of compromise
(if any). A word of advise... never, never,
never leave telnet or ftp (among other things)
open on a system that is connected to the
internet.