Marketpress Timeout at Checkout when calls paypal

Hi

One of my client website has suddenly stopped working at checkout using Paypal Express Checkout. The page takes ages to load after putting in the shipping details and pressing continue checkout. Eventually I get a Payment information page with nothing on or a message "There was a problem connecting to PayPal to setup your purchase. Please try again." I have checked the log files and I'm getting a timeout error.

[Sat Dec 15 15:15:57 2012] [warn] [client 86.2.59.64] Timeout waiting for output from CGI script /home/sites/peggyjane.co.uk/public_html/index.php, referer: http://www.peggyjane.co.uk/store/shopping-cart/shipping/
[Sat Dec 15 15:15:57 2012] [error] [client 86.2.59.64] Script timed out before returning headers: index.php, referer: http://www.peggyjane.co.uk/store/shopping-cart/shipping/

What I am wondering is if my hosting company could have changed something at server level that would prevent the connection to paypal.

Have you any advice on how I could debug this eg something like Heart Internet supports the fsockopen but not loopback.

I have had to take off paypal and install google checkout on the live site but but that is not a popular move with customers.

However, I still have a basic site with the checkout installed at: http://www.peggyjane.co.uk/new/ which has the same problem so I want to trace it on this test site before I reinstall paypal on the live site.

Sorry this is a little long.

Any advice would be appreciated.

Leonie