logical illogicality

Borrowed a book of logical qnz from lib- here's a sample question he gave me on msn that got me interested~

There is an island in which certain inhabitants called "knights" always tell the truth and others called "knaves" always lie. It is assumed that every inhabitant is either a knight or a knave. Three of the inhabitants A, B, and C were standing together in a garden. A stranger passed and asked A, " Are you a knight or a knave?" A answered, but rather indistinctly, so the stranger could not make out what he said. The stranger then asked B, "What did A say?" B replied, "A said that he is a knave." At this point the third man, C said, "Don't believe B, he is lying!"

The question is what are B and C.

cool right! =)