|Linux PPP HOWTO|
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If pppd refuses to set up a default route, it is because (quite correctly) it refuses to remove/replace an existing default route.
The usual reason that this error occurs is that some distributions set up a default route via your Ethernet card as opposed to setting up a specific network route.
See the Linux NAG and the Net2/3 HOWTOs for information on correctly setting up your Ethernet card and associated routes.
An alternative to this is that your LAN uses a gateway/router already and your routing table has been set up to point the default route at this.
Fixing up this last situation can require a fair bit of IP networking knowledge and is beyond the scope of this HOWTO. It is suggested you obtain some expert advice (via the news groups of from someone locally you can ask).