Wow!, thanks for the quick replies!
@Mitch_CA:
I have been suspecting some kind of buffer overrun as well. The Arduino ref. says 128bytes serial buffer and I know I am sending more. Unfortunately it does not say what happens when the buffer is full on the Arduino side. Will it block the sender from sending more until buffer is depleted?, or will it start corrupt/overwrite? I was guessing/hoping that it would block the sender from sending more data. Maybe it doesn't.
I will try to add some primitive handshaking/ACK to see if things get better.
@PaulS
I will add the delay just to see what happens.
Thanks guys!/Anders