i am afraid plesk 9 and 10 do not support PHP 5.3.
for some reason, mysql user passwords created by plesk use the old format while php 5.3 mysql extension only supports new long passwords.. it is not clear why plesk works like that, but that is a fact for plesk 9.5.x (not sure for plesk 10). this configuration is hardcoded into plesk files, and there is no way, apparently, to change it. it just make old passwords, even if you change mysql config settings to stop using old passwords.
so it is impossible to fully use plesk and php 5.3 together.
i guess that the only way to use php 5.3 with plesk is to STOP managing mysql databases from the plesk panel: you should only manage databases through command line or another tool (phpmyadmin) and make sure mysql is using long passwords by default. this is possible.. but you lose a functionality of plesk..
this is pretty annoying and it is a BUG, but they do not seem to be too much worried about it (at least not for plesk 9.5 which i use).