Hi Alex, 
so this would be right.

/etc/network/interfaces

auto lo
iface lo inet loopback

auth eth1
iface eth1 inet static
    address 192.168.1.3
    netmask 255.255.255.0
    gateway 192.168.1.1
    dns-nameserver 192.168.1.1  

Then tried this :-

 sudo /etc/init.d/networking restart
 * Reconfiguring network interfaces...                                          
                                             RTNETLINK answers: No such process
SIOCDELRT: No such process
WARNING: ifup -a is disabled in favour of NetworkManager.
   Set ifupdown:managed=false in /etc/NetworkManager/nm-system-settings.conf.

So this is right at the least saying that my connection is being managed
by Network-Manager

Then did this :-

sudo /etc/init.d/NetworkManager restart
 * Stopping NetworkManager...                                                   
                                      [ OK ] 
 * Starting NetworkManager...                                                   
                                      [ OK ] 

Network Manager also did not complain so looks good.

But when I right click on nm-applet and click on edit connection (nm-
connections-editor)

for eth1 it still shows me the connection as a dhcp connection and both
connect automatically and system settings are checked.

(Stumped here)

Another thing why is the dns-nameserver taken as 192.168.1.1 . From what
I understand of dns-nameserver they are usually something at the ISP's
end. For e.g. my ISP's dns name-servers are 61.1.96.69 , 61.1.96.71 or
sometimes use OpenDNS 208.67.222.222 and 208.67.220.220 . This
information should be there, shouldn't it.

-- 
wired connection settings are lost after reboot
https://bugs.launchpad.net/bugs/259214
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