Here goes the content of my hibernate.properties. I'm using c3po connection pool and the database is Firebird, so you'll have to change it. Hope it helps:
Code:
## define query language constants / function names
hibernate.query.substitutions true 1, false 0, yes 'Y', no 'N'
## package imports
hibernate.query.imports net.sf.hibernate.test, net.sf.hibernate.eg
#Firebird
hibernate.dialect org.hibernate.dialect.FirebirdDialect
hibernate.connection.driver_class org.firebirdsql.jdbc.FBDriver
hibernate.connection.url jdbc:firebirdsql:127.0.0.1/3050:auge
hibernate.connection.username sysdba
hibernate.connection.password mypassword
hibernate.connection.lc_ctype ISO8859_1
###########################
### C3P0 Connection Pool###
###########################
hibernate.c3p0.max_size 2
hibernate.c3p0.min_size 2
hibernate.c3p0.timeout 5000
hibernate.c3p0.max_statements 0
hibernate.c3p0.validate false
## use a custom ConnectionProvider (if not set, Hibernate will choose a built-in ConnectionProvider using hueristics)
#hibernate.connection.provider_class net.sf.hibernate.connection.DriverManagerConnectionProvider
#hibernate.connection.provider_class net.sf.hibernate.connection.DatasourceConnectionProvider
#hibernate.connection.provider_class net.sf.hibernate.connection.C3P0ConnectionProvider
#hibernate.connection.provider_class net.sf.hibernate.connection.DBCPConnectionProvider
#hibernate.connection.provider_class net.sf.hibernate.connection.ProxoolConnectionProvider
#######################
### Transaction API ###
#######################
## the Transaction API abstracts application code from the underlying JTA or JDBC transactions
#hibernate.transaction.factory_class net.sf.hibernate.transaction.JTATransactionFactory
#hibernate.transaction.factory_class net.sf.hibernate.transaction.JDBCTransactionFactory
## to use JTATransactionFactory with JCS caching, Hibernate must be able to obtain the JTA TransactionManager
#hibernate.transaction.manager_lookup_class net.sf.hibernate.transaction.JBossTransactionManagerLookup
#hibernate.transaction.manager_lookup_class net.sf.hibernate.transaction.WeblogicTransactionManagerLookup
#hibernate.transaction.manager_lookup_class net.sf.hibernate.transaction.WebSphereTransactionManagerLookup
#hibernate.transaction.manager_lookup_class net.sf.hibernate.transaction.OrionTransactionManagerLookup
#hibernate.transaction.manager_lookup_class net.sf.hibernate.transaction.ResinTransactionManagerLookup
#############################
### Miscellaneous Settings ###
##############################
## print all generated SQL to the console
hibernate.show_sql true
## set the maximum JDBC 2 batch size (a nonzero value enables batching)
hibernate.jdbc.batch_size 0
## use streams when writing binary types to / from JDBC
hibernate.jdbc.use_streams_for_binary true
Put it on your classpath, and see if it works. I have this one working just fine with Hibernate 3.