I was able to reproduce this on Ubuntu 8.10 with package hostname version 2.95.
Results from terminal:
me@:~$ sudo hostname airhead
sudo: unable to resolve host
me@:~$ hostname
airhead
me@:~$ sudo hostname ''
hostname: the specified hostname is invalid
me@:~$ hostname
me@:~$
Contents of /etc/hostname
[EMAIL PROTECTED]:~$ more /etc/hostname
airhead
[EMAIL PROTECTED]:~$
** Changed in: hostname (Ubuntu)
Status: New => Confirmed
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/bin/hostname complains about but still sets invalid hostname
https://bugs.launchpad.net/bugs/52335
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