Its a management nightmare though. Any time you add a computer or change a computer name then you have to create a new Hosts file and go through all the workstations and replace the existing file. Either way will work but from a management standpoint a WINS server is the way to go.
i agree, i just like the mental exercise. =) i suppose you could set up a logon script in the Local Group Policy Editor to grab a new copy from a fileshare - then you'd only have one file to update for adds/moves/changes. no doubt though, by the time you've gone through all that trouble, a freebie WINS server doesn't look so bad.
I recently took over a network that had 75 devices in it, no DNS, DHCP, or WINS server, and the old admin modified all the Hosts files on each workstation
eeeeek! now that's just crazy... i would never do it with more than a dozen or so clients and even then, only in a pinch.
i had a customer who was using an old XP box as a file server and sometimes they'd lose their drive mappings. the previous sysadmin had created a batch file on each desktop with NET USE commands to delete and remap the shares. the users would just double-click on it any time they couldn't get to their files.