In the long term, you probably want to connect via ssh (secure shell) rather than telnet, though I can understand you wanting to just use what works for you right now. A Telnet session is not encrypted, and that includes the username and password you enter when you login. With ssh, everything is encrypted. You would be amazed how easy it is to sniff and extract packets that have a predictable pattern, such as the cleartext username and password responses for a Telnet session, not that I would actually know anything about that stuff, though. No, sirree.
If you are using Mac OS X, Linux, BSD, etc., try ssh from a terminal window. For Windows, I recommend downloading a program called putty. If you want a GUI frontend on OS X for SFTP, SCP, and SSH, I’ve been pretty satisfied with fugu.