Thank GOD Problem is solved.

I was setting my ORACLE_HOME as
/opt/oracle/product/8.1.7 instead of /oracle/product/8.1.7
(In unix when I say cd /oracle it goes to /opt/oracle becasue there is a link>>>

lrwxrwxrwx 1 root other 11 Sep 30 10:42 oracle -> /opt/oracle


But with old oracleHOME I am able to connect to database with servicename attached.

Vivek