Hi-
I'm not sure if this is the same thing, or not, but my dad recently experienced the same type of thing after his surgery. He had surgery on Tuesday of this past week, and on Wednesday and Thursday night he was very agitated, disoriented and confused. He didn't know who we were at one point, and became very paranoid. We were so concerned that he had had a stroke, or that the cancer had spread to his brain. (his tumor was very large).
According to the doctors, he was experiencing something called "sundowners syndrome" - a syndrome that affects older patients as nighttime falls. They become confused and disoriented, talking to people that aren't there, and a general confusion as to what is happening. It usually gets better in the morning.
Look it up and see what you think. I think they recommend a small light be on during the night, which might help. They gave him a anti-psychotic drug called haldon, which worked while it was in his system. I'm not sure if you'd want to use it all the time though, since there seems to be some concern about it's safety when large doses are given.
Good luck - I certainly know how stressful and upsetting this is!