This bug was fixed in the package preseed - 1.71ubuntu3

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preseed (1.71ubuntu3) yakkety; urgency=medium

  * Fix for netcfg/hostname, if set, to take precedence. (LP: #1452202)
    - Modify debian/network-preseed.postinst

 -- Eric Desrochers <eric.desroch...@canonical.com>  Wed, 05 Oct 2016
11:50:09 -0400

** Changed in: preseed (Ubuntu)
       Status: In Progress => Fix Released

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https://bugs.launchpad.net/bugs/1452202

Title:
  ubuntu preseed install fails to set a hostname

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