I've copied (and slightly changed) my answer from a comment I posted on an issue on the Google code page for Terminal IDE, however, it should be the same:
If you are rooted, you can install the latest version of busybox (you may be able to compile it). Then find out where you updated busybox is and run the following commands: (I'm assuming the new version is in
/system/bin and the old version is in
mv busybox busybox.old
ln -s /system/bin/busybox busybox
Now domains will be resolved properly.
Please note: due to the way busybox works, you have to be root to be able to use
ping (although things like
nslookup should be able to resolve hosts properly now). The busybox developers are working on this issue.
I personally used this application to install the latest version: https://play.google.com/store/apps/details?id=stericson.busybox