Comment 21 for bug 471498

I was actually able to reproduce the issue of Network Manger putting a bad /etc/hosts using Fedora with the following steps:
     - remove hostname set from /etc/sysconfig/network
     - remove all contents of /etc/hosts
     - reboot
     - Network manager puts invalid /etc/hosts

So to get into this situation isn't easy. Though if you are installing from a preseed file may actually have this case for Ubuntu.

I also submitted fixes for the invalid file upstream. Though following these steps on Ubuntu doesn't seem to lead to the results that where hit. Will have to try again.