After installing Ubuntu 12.04, I faced an issue when connecting to the internet from my Huawei E220 dongle. So I did some google search and found a bug report relating this. After going through this issue I found a workaround which fix the issue.
This is the workaround.
You should execute following command as root.
echo -e "AT+CNMI=2,1,0,2,0\r\nAT\r\n" > /dev/ttyUSB1
Now try to connect your dongle again, it works for me until dongle is removed from USB port. Thanks Nikos for your workaround :)