i was told by support that not specifying any DNS settings would mean that the routers just pass the DNS requests up to the ISP/default gateway.

the internal dns could then be specified, but i'm yet to try this.

If your router is your DHCP server then you should put public (non ISP DNS servers - OpenDNS or Google for example) in the router. The client PC's should have the router as its DNS server so the PC asks the router and the router asks the public DNS server via which ever WAN port is open (or by Load Balancing Rules).

Using DNS Servers of WAN1 when traffic is going via WAN2 is going to cause problems !

yes the point i was making is that i cant have both WAN1 and WAN2 DNS address populated because they would replace the internal DNS server that you specify in LAN->DHCP setup.

I found that if you have an internal DNS server (like a Windows Domain DNS server) you can just specify that, then setup DNS forwarders on the domain server:
http://support.microsoft.com/kb/323380

basically saying if your internal server cant do it pass it onto the ISP DNS servers.