Strange problem with select (or maybe me :-))

EDIT: not sure if this got through the first time!

I have written a server which accepts a connect and then reads ad
nauseum until the other end closes the connection. This works fine
when using netcat or telnet normally, except when I echo a value into
the telnet program using a pipe, like so:
echo Hello | telnet 127.0.0.1 8080

The program reads the first input ok, but then when I type in
subsequent input normally in the telnet session does not get read.
I'm probably doing something stupid so I post a short example program
for people to have a look at:

#include <stdlib.h>
#include <stdio.h>
#include <string.h>
#include <sys/select.h>
#include <sys/time.h>
#include <arpa/inet.h>
#include <errno.h>

static char buffer[512];

int main()
{
struct sockaddr_in sn;
struct timeval tm;
int r, _1, client, server = socket(AF_INET, SOCK_STREAM, 0);
if (server < 0) {printf("errno = %s\n", strerror(errno)); exit(1);}

_1 = 1;

r = setsockopt(server, SOL_SOCKET, SO_REUSEADDR, &_1, sizeof(_1));
if (r != 0) { close(server); printf("errno = %s\n", strerror(errno));
exit(1); }

memset(&sn, 0, sizeof(sn));
sn.sin_family = AF_INET;
sn.sin_addr.s_addr = inet_addr("0.0.0.0");
sn.sin_port = htons(8080);

r = bind(server, (struct sockaddr*) &sn, sizeof(sn));
if (r != 0) { close(server); printf("errno = %s\n", strerror(errno));
exit(1); }

r = listen(server, 5);
if (r != 0) { close(server); printf("errno = %s\n", strerror(errno));
exit(1); }

tm.tv_usec = 1000;

client = accept(server, NULL, NULL);
if (client < 0) { close(server); printf("errno = %s\n",
strerror(errno)); exit(1); }

{
fd_set in, out, err;
FD_ZERO(&in);
FD_ZERO(&out);
FD_ZERO(&err);
for(;;)
{
FD_SET(client, &in);
FD_SET(client, &err);

r = select(client+1, &in, &out, &err, NULL);

printf("select returned %d\n", r);

if (r > 0)
{
if (FD_ISSET(client, &err))
{
printf("errno = %s\n", strerror(errno));
close(client);
close(server);
exit(5);
}

if (FD_ISSET(client, &in))
{
ssize_t bytes_transfered = read(client, buffer, 512);
if (bytes_transfered == 0) { printf("errno = %s\n",
strerror(errno)); close(client); close(server); exit(3); }
if (bytes_transfered < 0) { printf("errno = %s\n",
strerror(errno)); close(client); close(server); exit(4); }
printf("received %d bytes\n", bytes_transfered);
}

} else if (r < 0)
{
printf("errno = %s\n", strerror(errno));
close(client);
close(server);
exit(2);
}
}
}

return 0;
}