I'd say, this is not generally wrong. You definitely should leave the first few lines in your /etc/hosts file:
127.0.0.1 localhost
255.255.255.255 broadcasthost
::1 localhost
fe80::1%lo0 localhost
# Add additional host names below:
127.0.0.1 newton
127.0.0.1 testhost
127.0.0.1 something
I've got such a configuration myself on Mac OS 10.6 (Snow Leopard) and had this on 10.5 (Leopard) as well, with Parallels Desktop and Apache still working.
But this configuration does not mean your additional hostnames are working on your virtual machines in Parallels as well. Edit the host files on each VM separately.