In my case I have configered my laptop for a LAN with a router (which is my
default gateway) for when I'm at my office, and a dialup PPP connection via
/dev/ttyS0 and my ISDN adapter to my ISP for when I'm elswhere e.g. at
home. When no LAN was configured PPP was fine. Since my LAN was configured
(with a default gateway) PPP gave me a connection that wouldn't work.
Debug told me PPP could not change the default gateway (although this
option was used). I found that this is solved by placing the call to pppd
in a wrapper script that does a 'route del -net 0.0.0.0 gw router-ip'
before calling pppd, and a 'route add default gw router-ip' after
disconnecting and stopping pppd. With de default gateway on eth0 out of the
way, pppd is able to establish the PPP peer as default gateway.
I don't know if this is a bug or a feature (or a user error), but this
behaviour (if a feature) might be doumented e.g. in the ppp-faq.
There is already another problem report on default gateways & ppp, with
another cause.

Regards,

Rob