Hi Gal
It is certainly possible. I have a project which allows setup of the serial interface via a web page - it calls the initialisation routine again and the new settings are immediately valid. The only thing which I notice is that there is a glitch on the TX output when it is reconfigured but otherwise it works fine - changing from 300b/s to 115200b/s has no problems.
Without more details it is not possible to know what is going wrong - however beware that 115200 is not that accurate from the 25MHz crystal and it may be that your terminal is not understanding something - I have seen this once with the NE64 connected to another device which also had a lax tolerance (ASYNC requires better than 5 procent tolerance).
If you haven't already considered it, look at the following posting: http://forums.freescale.com/freescale/board/message?board.id=16BITCOMM&message.id=897
The uTasker is free of charge for non-commercial use and comes with an operating system, TCP/IP stack and proven UART drivers (XON/XOF, echo, escape character modes, etc). You can then change the setting via Telnet or web browser 'on-the-fly' and know that it works. It has a NE64 simulator which will allow projects on the NE64 to run in real-time on a PC where complete devvelopments can be completed before verifying on the target. If you ever decide to upgrade to the big brother, the Coldfire M5223X, the code also compiles to it with just a precompiler define change...see also this posting in the Coldfire forum:
http://forums.freescale.com/freescale/board/message?board.id=CFCOMM&message.id=274
Regards
Mark Butcher
www.mjbc.ch