Lion "hosts" File Bug
All additional entries to the HOSTS file must be above the:

fe80::1%lo0


Make sure there is at least one line break after the last entry. Like so:

127.0.0.1 LLL.localhost
127.0.0.1 LLL.localhost
#


Although you probably can't tell, there is another line following the # symbol. One more thing to mention, using Space instead of Tab between 127.0.0.1 and localhost might help too.