Handling of /etc/hosts is highly site- and admin- specific in
many more complex cases, and it's exceedingly hard and error-
prone for NetworkManager to handle all those cases.  So remove
this functionality entirely.  That's not a big loss, as it
turns out there's a much more elegant solution.

The only requirement is that the machine's hostname map back
to an IP address owned by the machine.  That requirement can
be satisifed by nss-myhostname or even possibly the distro's
installer.  If the user does not want nss-myhostname then it
can be uninstalled.  Distros should use a "recommends" feature
in their packaging system so that the NetworkManager package
does *not* have a hard requirement on nss-myhostname.  Thus
everyone is happy; things Just Work when nss-myhostname is
installed, but more advanced users can uninstall it and
customize /etc/hosts as they wish.

Another alternative is a dispatcher script that listents for
the 'hostname' event, and updates /etc/hosts according to the
administrator's preference.