By default, if you try to modify your hosts file in Vista, it will not let you save it. It tells you that you don't have permission. To successfully modify the hosts file, run notepad.exe as an administrator and open the file.
1) Browse to Start -> All Programs -> Accessories
2) Right click "Notepad" and select "Run as administrator"
3) Click "Continue" on the UAC prompt
4) Click File -> Open
5) Browse to "C:\Windows\System32\Drivers\etc"
6) Change the file filter drop down box from "Text Documents (*.txt)" to "All Files (*.*)"
7) Select "hosts" and click "Open"
8) Make the needed changes and close Notepad. Save when prompted.
Your default Vista hosts file should look like this:
# Copyright (c) 1993-2006 Microsoft Corp.
# This is a sample HOSTS file used by Microsoft TCP/IP for Windows.
# This file contains the mappings of IP addresses to host names. Each
# entry should be kept on an individual line. The IP address should
# be placed in the first column followed by the corresponding host name.
# The IP address and the host name should be separated by at least one
# Additionally, comments (such as these) may be inserted on individual
# lines or following the machine name denoted by a '#' symbol.
# For example:
# 184.108.40.206 rhino.acme.com # source server
# 220.127.116.11 x.acme.com # x client host