[CentOS] telnet isssue

> We are runnig  a system on CentOS 4.5 where we use a testing ERP
> system. Users have to login to it with telnet. When it reches about 60
> telnet users, the remaing users will NOT be able to login.
>
> Hardware is , HP Pentium 4 Server with 4 Gb RAM .
>
> Pls Note we used the same system on a lower Machine with Redhat EL 3
> until yesterday. But , it worked fine. @ that time, more than 100
> users logined with telnet.
>
> Now, only it gves such error even when we have better Hardware and Software.
>
> Any ideas?

What does the client see that can not log in via telnet?  What does 
/var/log/messages say when additional users attempt to log in?