I am able to reproduce this on edgy with:
ii gnome-system-t 2.15.5-0ubuntu Cross-platform configuration utilities
Easier info: run network-admin , choose modem, then properties.
And do sudo cat /etc/ppp/pap-secrets to check info there.
** Changed in: system-tools-backends (Ubuntu)
Status: Unconfirmed => Confirmed
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PPP username/passwords that contain hashes get corrupted
https://launchpad.net/bugs/14824
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