It looks like in the upgrade to Leopard I lost NetInfo Manager which was a handy tool for editing and creating HOSTS.
From http://docs.info.apple.com/article.html?artnum=306494
NetInfo Manager is not included with Mac OS X 10.5 Leopard. You can use the command line utility dscl to perform some advanced functions formerly covered by NetInfo Manager. Open Terminal and type "dscl" to access it.
So to create HOSTS with Leopard you are going to need to: