Jeff, Do you have 'ipnodes' enabled in /etc/nsswitch.conf ? If yes, try disabling it. If it doesn't work, try the following entry:
ipnodes: dns[NOTFOUND=continue] files
I don't have /etc/nsswitch.conf at all.
If I create /etc/nsswitch.conf with "ipnodes: dns[NOTFOUND=continue] files" as the only line, it doesn't change anything; I can still find names in /etc/hosts and still can't find names not in /etc/hosts.