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Can't log in, from any users, after PHP upgrade on server

I have a login problem. After submitting details, I just get thrown back to the same page, with login box still there. And OFC the access to privileges remain denied. Cleared the cookies, cache, restarted, tried on different users, different browsers, different PC's, nothing helps. Cant see the problem. I haven't changed anything in files or settings, just know that there was a PHP upgrade on server recently from 5.2.x to 5.3.x. Could this have caused this? How exactly could this influence my drupal installation and what might have messed up? Where to look to solve this?

I have checked the setting file and directory permissions, they are still sitting on 644 for settings.php and 755 on ../default, 777 on ../default/files folder.

I have tried to change
$cookie_domain = '.mysite.com';
but that didnt help either.

Please help :)
Thanks a lot in advance!