I don't see any glaring security holes in your script, but I have a couple of suggestions:
1) don't store passwords as plain text in your database. This is to protect your users should your database ever be compromised. Instead, store them as a hash of some sort. md5() is amazingly simple, and crypt() is only slightly more difficult to implement.
http://us2.php.net/md5
http://us2.php.net/crypt
2) you don't really need to store their password in the session - I doubt you'll be needing it again. Especially if it's encrypted.
3) location headers are *supposed* to have the full
http://domain.com/whatever.php, not just the whatever.php. However, prettymuch every browser out there can handle it, so this is mostly a moot point.
http://www.w3.org/Protocols/rfc2616/....html#sec14.30