Alexander, thank you for your tips.

Unfortunately the updates you mentioned above, network manager from
ppa.launchpad.net/network-manager/ubuntu and the PPP in Proposed, have
had no effect.

There is still no valid DNS set ~50% of the time, as per my previous
comments. Sometimes I get a good connection right away, sometimes it
takes a few attempts, this morning it took 13 attempts before DNS was
set and I could use the connection.

Is there any other logs or information I can provide? Are others
experiencing this problem? For me bug this is not fixed.

-- 
Gets bogus DNS servers during PPP negotiation
https://bugs.launchpad.net/bugs/258801
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