If your Netgear FVS338 dialup backup is failing, you might have a firmware problem. Sometime after firmware 3.0.2-21 (and not fixed as of 3.0.7-24), the dialup interface connects and grabs an IP address – it even allows ping, traceroute, and DNS lookups from the FVS338 web interface – but it will not route any traffic from the LAN to the WAN. Your client machines will be able to perform lookups, but no other traffic will route, so the dialup backup is useless.
The solution is to downgrade to an earlier firmware, which you can do from here. Click “Downloads”, then click “Show All Versions” and select an earlier firmware. I can confirm that dialup backup mode works as of 3.0.2-21; if you try a later one and it works, let me know via comment.