I think that the problem here is that the Arduino is spitting out over serial something that looks like "{ 123, 1233} \n { 456, 789 } \n " so when you go to plot that, it doesn't automatically evaluate to the list of lists that you want, and stays as Vitaliy points out in String format. So if you split it by the newline character and use ToExpression I think that should work for you.
When I uploaded your sketch to my Arduino, the following worked for me.
rawdata = DeviceReadBuffer["Serial"]
points = ToExpression /@ StringSplit[FromCharacterCode[rawdata], "\n"]
ListLinePlot[points]
That gave me what I think you are looking for.
Ian
