Recently Yahoo changed the way in which we connect to the IM, which broke Pidgin clients in Debian Lenny and Ubuntu systems, specifically pidgin client version 2.5.7 and below. We can correct it by doing the following if you don't want to upgrade your clients to something latest,
Go to your yahoo account settings in Pidgin. You'll see two tabs at the
top. Go to the second tab(advance). There you'll find, "scs.msg.yahoo.com"
and a few other web addresses change it to *cn.scs.msg.yahoo.com*.
Thanks to Vipin M of AU-KBC who gave this piece of info via ILUGC mailing list.