I have seen this as well.

In my case what is happening is this:

1) I have one interface which is dynamically assigned via DHCP (upstream to my 
ISP)
2) I have a second interface which is statically assigned (my local LAN 
interface).
3) I have a local name server (for caching and for local name resolution).
4) I have /etc/network/interfaces configured to statically assign the local 
interface, and to set the name server for the local interface to 127.0.0.1, so 
that when %#@()&*$ network manager OVERWRITES THE /etc/resolv.conf file I SET 
UP it will at least overwrite it correctly for the local machine.
5) HOWEVER, the same entity that is overwriting /etc/resolv.conf is also 
overwriting /etc/dhcp3/dhcpd.conf  and setting the nameserver to 127.0.0.1, 
which is then served out to the network clients.

FIRST OF ALL: There should be a way I can tell the network manager
scripts "I have configured these files - LEAVE THEM THE HELL ALONE!"

Second of all, the scripts should be "smart" enough to detect a
nameserver of 127.0.0.1 and NOT set DHCPD to do that.

-- 
dhcpd sends 127.0.1.1 as DNS server
https://bugs.launchpad.net/bugs/340383
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