[harisman]

Just to add that you can automate the Carpetsmoker's suggestion.
This is the part of my .cshrc as shown above:

if ($TERM == "xterm") then 
        set prompt="%{\033]0;%n@%m:%~\007%}%h:%n@%m\:%~\%%{\033[0m%} "
        bindkey ^[[3~ delete-char
else
        set prompt="%h:%n@%m\:%~\% "
        bindkey ^? delete-char
endif