There is a conflict between OT/PPP Strip and automatic Sleep (as invoked by the PowerBook control panel), at least on the PowerBook 3400. With OT/PPP Strip installed, automatic Sleep does not occur.
The OT/PPP Strip web page also reports that a bug-fix release, 1.0.1, should be out by early July. It fixes a "hard drive spin-down bug and makes finding the configuration file more robust." According to Dennis Wilkinson, the author of OT/PPP Strip, this spin-down fix should also fix the Sleep problem. (Thanks also to Jason Archibald, for helping in tracking this down.)