I solved the problem by switching to a Huawei E398 instead. 
I did try to find a firmware upgrade for the E220 but failed.

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https://bugs.launchpad.net/bugs/779554

Title:
  Connection unreliable -- Huawei E220

Status in “network-manager” package in Ubuntu:
  Incomplete

Bug description:
  Binary package hint: network-manager

  11.04
  network-manager 0.8.4-0ubuntu1~nm6~natty (From daily build PPA)

  i am experiencing intermittent connection problems with my GSM modem
  (Huawei E220)

  most of the time it works fine but occasionally the device will
  disconnect, be re-detected by the kernel and by network manager but if
  i try to get it to connect (using NetworkManager) it will immediately
  be disconnected at the kernel level. This may resolve itself after a
  few attempts but occasionally I have to delete the connection in
  NetworkManager and recreate it which solves the issue (which also
  indicates that it is not a provider issue).

  I have updated to the daily build PPA version of network manager which
  does not seem to solve the problem

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