The problem:

I start pppd, the connection comes up, if-up is run. After that I get
"No response to 3 echo-requests" and the link is disconnected. I have
tried using Fedora and an XScale linux with the same result.

The log:

CONNECT
Serial connection established.
using channel 4
Using interface ppp0
Connect: ppp0 <--> /dev/ttyS2
sent [LCP ConfReq id=0x1 ]
rcvd [LCP ConfReq id=0x1 ]
sent [LCP ConfAck id=0x1 ]
rcvd [LCP ConfAck id=0x1 ]
sent [LCP EchoReq id=0x0 magic=0x0]
sent [PAP AuthReq id=0x1 user="gprs" password=]
rcvd [LCP CodeRej id=0x3 09 00 00 08 00 00 00 00]
LCP: Rcvd Code-Reject for code 9, id 0
rcvd [PAP AuthAck id=0x1 ""]
sent [IPCP ConfReq id=0x1 0.0.0.0>]
rcvd [IPCP ConfReq id=0x1 ]
sent [IPCP ConfAck id=0x1 ]
rcvd [IPCP ConfNak id=0x1
]
sent [IPCP ConfReq id=0x2
]
rcvd [IPCP ConfAck id=0x2
]
local IP address 10.16.87.125
remote IP address 10.16.87.124
primary DNS address 217.174.65.61
secondary DNS address 217.174.65.62
Script /etc/ppp/ip-up started (pid 165)
Script /etc/ppp/ip-up finished (pid 165), status = 0x0
sent [LCP EchoReq id=0x1 magic=0x0]
rcvd [LCP CodeRej id=0x4 09 01 00 08 00 00 00 00]
LCP: Rcvd Code-Reject for code 9, id 1
sent [LCP EchoReq id=0x2 magic=0x0]
rcvd [LCP CodeRej id=0x5 09 02 00 08 00 00 00 00]
LCP: Rcvd Code-Reject for code 9, id 2
No response to 3 echo-requests
Serial link appears to be disconnected.
Script /etc/ppp/ip-down started (pid 168)
sent [LCP TermReq id=0x2 "Peer not responding"]
rcvd [LCP TermAck id=0x2]
Connection terminated.

================================================== =============

When I run ifconfig and ping from ip-up I get the following result:

ppp0 Link encap:Point-to-Point Protocol
inet addr:10.14.68.19 P-t-P:10.14.68.18
Mask:255.255.255.255
UP POINTOPOINT RUNNING NOARP MULTICAST MTU:576 Metric:1
RX packets:3 errors:0 dropped:0 overruns:0 frame:0
TX packets:3 errors:0 dropped:0 overruns:0 carrier:0
collisions:0 txqueuelen:3
RX bytes:54 (54.0 b) TX bytes:54 (54.0 b)

PING www.sunet.se (192.36.125.18): 56 data bytes
64 bytes from 192.36.125.18: icmp_seq=0 ttl=236 time=648.8 ms

================================================== =============

/etc/ppp/options:

debug
nodetach
defaultroute
crtscts
mru 576
mtu 576
lock
lcp-echo-interval 5
lcp-echo-failure 3
/dev/ttyS2
38400
connect "/usr/sbin/chat -S -f /etc/ppp/chat.script"
nomagic
asyncmap 0
novj
user gprs
noipdefault
ipcp-accept-local
usepeerdns
noccp