Just found a workaround... worked 3 out of 3 times which is a much better 
record than before.
Here's what I did.

Booted Ubuntu with the modem plugged in.
Right Clicked the icon representing my modem on the desktop (because nautilius 
mounted it as a storage device) and clicked eject.

Then, I unplugged and re plugged the modem.

Waited for a few seconds (approx 15-30) and then clicked connects in the 
network manager applet.
applet version is 0.7.996
Kernel is default Karmic  kernel (no updates)

-- 
Several Huawei USB dongle don't work with kernel 2.6.31-12.40 (2.6.31.1 update 
related)
https://bugs.launchpad.net/bugs/446146
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