ps: 127.0.0.1 is yourself.
In fact, 127.0.0.0/8 (that's 127.0.0.0 through 127.255.255.255) is all yourself.
But, if you can ping sites, then IP is working fine, if you're using the names to do so, then DNS is working fine. The issue is at a higher layer.. likely culprits would be either something messed up in your proxy settings, or possibly that your ISP does transparent caching and has broken it (though unlikely if it's been going on any length of time - they'd want to have something like that sorted out pronto).