Can you explain what exactly you are trying to do? Do you really need 2 stack? Do you really need a ppp connection? 
There might be other solutions.

To answer your question, the ip1:ip2 is the ip address, the server set itself to ip1, and who ever connect to this 
server (this serial port) will get ip2. That's why the client side don't need address (it gets it from Server).

> I am trying to establish PPP connection over serail link b/w my computer and 
> my target.
> 
> I searched that following commands to be run on respective machines
> 
> ppp server side : pppd /dev/ser1 115200 10.100:10.200
> ppp client side : pppd /dev/ser1 115200 debug updetach
> 
> i didnt understand what 10.100:10.200 ..is it that we are assingin address to 
> the serail port ...if so why that is missing on the second commnad.
> 
> Please send me the right commands, so that i will be able to ping among 
> systems over PPP.
> 
> My second challenge is to assign dynamically IP address to target over PPP and
>  then communciate.
> 
> Ravi 


10.100 and 10.200 are IP address. 10.100 means 10.0.0.100 and 10.200 means 10.0.0.200. You could type any kind of IP 
address. 
Simply you could put IP address like 192.168.1.1:192.168.1.10.

You don't need assign ip address to the serial port. If ppp connection is established between ppp server and client, ppp
 server and ppp client should have IP address.

> Please send me the right commands, so that i will be able to ping among 
> systems over PPP.
> 

proxyarp
    Add an entry to this system's ARP (Address Resolution Protocol) table with the IP address of the peer and the 
Ethernet address of this system. The default is not to add an ARP entry (usually a server option).

Can you ping when you specify this pppd option on both sides (server/client)  ?

Jeevan