I manged to get it working with some lateral manouvering!
Used kppp to dial up and selected 'automatic dns'. Kppp puts a temp dns address entry in /etc/resolv.conf. Strangly though, kppp only lets you select 'automatic dns' as root, I changed the permissions on /etc/resolv.conf but this did not help.
Copied the kppp temp address to /etc/resolv.conf and ppp-on now dials up and dns works ok.
Gotta work out how to use pppd as normal user now!