Ahh. If you're using the internal oscillator, then there is a
calibration register that needs to be set. As they leave the factory,
they're apparently calibrated when set at 1 MHz but not at other freq.
I've heard that the calibrations are temp sensitive and it wouldn't
suprise me if they're voltage senstive (since it's an RC oscillator).

Thanks for pointing this to me. I checked the ATMEGA8 datasheet and the calibration of the RC internal oscillator (and then the USART when the RC oscillator is clocking the mcu) is indeed voltage sensitive. What's strange though, is that when the ATMEGA was powered by the 3.3V power supply, it did send  correct data to the PC through a MAX232. Or maybe not. I've tried so many things and I got so confused that I may have mixed some cables...

The data sheet for the PXA255 gives the max input voltage on any pin
as max( Vcc +0.3v, Vss + 4.0v). So using a 5v input isn't recommended.

I'll have a new PCB made tomorrow with the ATMEGA clocked by a crystal and powered by a 3.3V power supply. I'll let you know how it works. I just hope it will.

Thanks again,