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My opinion is: that is what it looked like and it is an easy way to explain it so that is what your host told you.
As you have not clarified 1 way or the other despite it being suggested twice I am going to assume you did sign up with a silly temp pass and never changed the VNC password, someone found your VPS through a common port scan and ended up getting straight in.
Either that or the host just cocked something up and you will never get to the bottom of it.
@AnthonySmith I logged me out after reinstall so not possible.
@Infinity580, reboot via vnc and boot to single user mode? very possible.