Well, turns out that is the kernel, not ppp!! I've booted with an old
kernel (Karmic's 2.6.31-19) and ppp/wvdial work as expected. So the bug
has to be in the kernel (2.6.32-12)

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ppp won't connect (Receive serial link is not 8-bit clean: Problem: all had bit 
7 set to 0)
https://bugs.launchpad.net/bugs/520372
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