MySQL 4.1.19 (no threads !?)

Ever since we upgraded our servers to MySQL 4.1.19 (from 4.1.18), I've seen that there is only one thread serving all requests. Previously there used to be multiple threads running and I believe that there is some configuration missing with the new version. Could someone please guide me here.

For reference sake, I am using a normalized my.cnf

Code:

/etc/my.cnf

[mysqld]
set-variable = max_connections=500
safe-show-database
old_passwords
wait_timeout = 10
connect_timeout = 10