I was having problems with Firefox on FC7 not finding entries in my /etc/hosts. I found the following at mozillazine.org.
The problem may be with IPv6 ("Internet Protocol version 6"). To disable IPv6, change the preference network.dns.disableIPv6 from "false" to "true" . Here are the steps:
Type about:config in the address bar, press Enter.
Find network.dns.disableIPv6 in the list.
Right-click -> Toggle.
Restart Firefox/Mozilla Suite and try again.
If this doesn't work, re-enable IPv6 by resetting the preference to "false".