USEPEERDNS is again set to yes which means that ifup-ppp rewrites resolve.conf and eliminates the nameserver settings and replaces them with the ISP's DNS. This effectively kills internal DNS resolves when using RFC1918 IP's for example.
Yes. Is there a reason you can't unset it in your case?
Of course I set it back, but can you give me any good reason why I had to do that? I dont consider it a feature if it over writes my resolve.conf with DNS entries that I dont need/use. The ifup-ppp should be an rpmnew. I was upgrading a server that provides services for six internal machines not a standalone dial-up workstation. My DNS servers knows how to talk to the ISP DNS servers without them being in resolv.conf. This has never been an endearing feature since it was instituted. It may be wonderfull and helpful to the helpless but not to the rest of us.
ifup-ppp should not be made into an rpmnew file; it's not a config file. In fact, it probably shouldn't even be marked %config. To turn off support for this, set PEERDNS=no in whatever ifcfg-<interface> file you're using.