after fresh and successful upgrade from 1.6+ to 1.8 on first time login you got the error
Fatal error: Call to undefined function strislashes() in /var/www/moodle/auth/pam/auth.php on line 71

It is a typing error in file ./moodle/auth/pam/auth.php :
if (pam_auth(stripslashes($username), strislashes($password))) {

should be:
if (pam_auth(stripslashes($username), stripslashes($password))) {