Looks like you got your hosts entries backward ... it should go like this:
127.0.0.1 machinename.subdomain(if any).domain.com shortcuts
the 127 is when you want to access your own machine without having to search out the network ... using anything else for your machine will not change anything in practice unless a particular program you want to use requires you to run it from 127.0.0.1 127.0.0.1 is just for your machine, so if you access 127 from another machine, you will be getting things from the "another" machine and not from the first one.
Here is an example hosts file
127.0.0.1 localhost.localdomain localhost
192.168.1.58 email.lacasadetomas.com email
192.168.1.59 ftp.lacasadetomas.com ftp
so, instead of having to remember IP addresses, you can just type "www" in your webbrowser to check out that website (and not just teh web browser either! works in other apps). You could also use this on public Internet sites to avoid the DNS lookups and make the site appear sooner.
As to how the above your stuff behaves, just try it out. I would not change the localhost line since that has affected my ability to print in the past