Exactly the same problem as Nov 29 2009. The DNS servers were still in the lan_dns value in nvram, but weren't in the /etc/resolv.conf. I added them, and the router was then able to resolve DNS addresses.

Wifidog reported that it went down 3 days ago. I connected via VPN. Wifidog was still running ('wdctl status'), but was reporting that it couldn't connect to the auth server. I tried pinging the auth server ('ping auth.wirelesstoronto.ca') and it couldn't resolve the address. I changed the DNS server in both /etc/resolv.conf ('vi /etc/resolv.conf') and in the router config ('nvram set lan_dns='4.2.2.2 128.100.100.128') and it started working.

Installed by Gabe. Channel 1. It's in the office. WAN port of the wireless router is plugged into a D-Link wired router which is in turn plugged into their 'net connection.