Public bug reported:

Binary package hint: dhcp3-server

I believe this is a bug.

Ubuntu configures sets the hostname in /etc/hosts and assigns it to
127.0.1.1:

127.0.0.1     localhost
127.0.1.1     server.example.com server

The dhcpd server picks this up and sends it as primary DNS server (DHCP and DNS 
are on the same machine here) to dhcp clients (see attached dhcpdump output).
Assigning the wrong DNS server leads to timeouts on Mac and Linux (Unix) 
clients, but it does not seem to affect Windows systems.

As soon as I comment 127.0.1.1 in /etc/hosts out and restart the dhcpd
server the problem is gone.

I did not find a configuration option for dhcpd to supress this and I
also think even if it was there it should not be used for this. The
entry 127.0.1.1 seems to be wrong in my opinion.

Thanks.

** Affects: dhcp3 (Ubuntu)
     Importance: Undecided
         Status: New

-- 
dhcpd sends 127.0.1.1 as DNS server
https://bugs.launchpad.net/bugs/340383
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