mpu 6050 problem for atmega 8

[Disha Karnataki]

i have rigged up this sensor to my atmega 8 microcontroller :
here is the image of sensor:http://playground.arduino.cc/uploads/Main/mpu-6050.jpg
i have given 3v supply to the board. And i am using pleury's header file for i2c communication b/w my sensor & atmega. so below i have written a code to see just whether the device is accessible or not
pin connections to mpu:
vcc-3v
scl,sda pins of mpu: i have connected 4.7k pulls ups through 3v supply as per the dig here;
http://blog.codeblack.nl/image.axd?picture=2011/7/Netduino.I2C.png and have given it to scl (pc5) &sda (pc4) pins of atmega.
xcl,xda pins are left open.
ad0 pin is given to 0v.
int pin open.
as per datasheet if ad0=0 then address of the device =0X68.

i am using avr studio 4.

here is my code:

#include<avr/io.h>		         //This is the header for AVR Microcontroller.
#define F_CPU 12000000UL
#include "i2cmaster.h"
#include<util/delay.h>      
#include"lcd118010.h"	              //lcd 
#define mpu 0X68                     //address of the i2c device
int main(void)
{
unsigned char ret=0;
PORTC=0X00;                           //disabling the internal pull up for sda,scl
lcd_init();
i2c_init();                                   //initialise i2c communication

while(1)
{
lcd_string("hi ");
_delay_ms(1000);

ret=i2c_rep_start(mpu);      //send adress to recognize slave device  and if  ret=0 device is  accesible  ret=1 device is not accessible 

lcd_showvalue(ret);  //print that value on lcd 
_delay_ms(1900); 

lcd_clear();    //clear lcd & continue
}
}

my observations :lcd is printing "hi" but, ret value is not printing(neither 1 nor 0) and neither is lcd clearing. but if i am commenting

ret=i2c_rep_start(mpu);

then only lcd clears & rexecutes the loop
how do i solve this problem? is my sensor ok?