You bring up some very good points. The only secure box is a turned off one with no connections.
Most of the cracks that do happen fall into the category of what I call preventable. By this i mean if a patch had ben applied, or unneccessary services had been turned off, you would have prevented the attack. You mention a good point with telnet. IIRC Apache.org was defaced like that.
Most of the attacks that occur are the results of someone that read about some kewl haxor trick and ran numerous scans to find the needle in the haystack that was vulnerable. (see any apache server's logs around the time of code red).
A few points that i stress to my coworkers- have only minimal services on each box. I hate to build a mail/web/ftp server on one machine. It creates way more headaches for me. Hardware is cheap enough now that I would rather build three seperate servers for public usage (if they do break in, it is easier to take one down than lose all three). I really do not belive in ftp for anything other than anonymous access. secure copy is a better option for me. All of my servers run email servers that are tightly configured to allow email usage for administrative usages only.
Taking simple common sense steps can protect you. It may not be enough to prevent a determined hacker, but there is not a whole lot that can.
"The social dynamics of the net are a direct consequence of the fact that nobody has yet developed a Remote Strangulation Protocol." -- Larry