Fix sent upstream. Awaiting ACK:

  https://www.redhat.com/archives/libvir-list/2012-October/msg01077.html

Commited upstream:

commit 1cb1f9dabf8e9c9fc8dfadbb3097776ca5f2c68c
Author: Laine Stump <laine@laine.org>
Date:   Fri Oct 19 16:15:44 2012 -0400

    network: always create dnsmasq hosts and addnhosts files, even if empty
    
    This fixes the problem reported in:
    
      https://bugzilla.redhat.com/show_bug.cgi?id=868389
    
    Previously, the dnsmasq hosts file (used for static dhcp entries, and
    addnhosts file (used for additional dns host entries) were only
    created/referenced on the dnsmasq commandline if there was something
    to put in them at the time the network was started. Once we can update
    a network definition while it's active (which is now possible with
    virNetworkUpdate), this is no longer a valid strategy - if there were
    0 dhcp static hosts (resulting in no reference to the hosts file on the
    commandline), then one was later added, the commandline wouldn't have
    linked dnsmasq up to the file, so even though we create it, dnsmasq
    doesn't pay any attention.
    
    The solution is to just always create these files and reference them
    on the dnsmasq commandline (almost always, anyway). That way dnsmasq
    can notice when a new entry is added at runtime (a SIGHUP is sent to
    dnsmasq by virNetworkUdpate whenever a host entry is added or removed)
    
    The exception to this is that the dhcp static hosts file isn't created
    if there are no lease ranges *and* no static hosts. This is because in
    this case dnsmasq won't be setup to listen for dhcp requests anyway -
    in that case, if the count of dhcp hosts goes from 0 to 1, dnsmasq
    will need to be restarted anyway (to get it listening on the dhcp
    port). Likewise, if the dhcp hosts count goes from 1 to 0 (and there
    are no dhcp ranges) we need to restart dnsmasq so that it will stop
    listening on port 67. These special situations are handled in the
    bridge driver's networkUpdate() by checking for ((bool)
    nranges||nhosts) both before and after the update, and triggering a
    dnsmasq restart if the before and after don't match.

Verify this bug with libvirt-0.10.2-5.el6.x86_64.
Steps
1. Start the default network, and check the dnsmasq commandline, both dhcp-hostsfile and addn-hosts files are created
#  ps aux|grep dnsmasq
nobody   23193  0.0  0.0  12884   680 ?        S    17:47   0:00 /usr/sbin/dnsmasq --strict-order --bind-interfaces --local=// --domain-needed --pid-file=/var/run/libvirt/network/default.pid --conf-file= --except-interface lo --listen-address 192.168.122.1 --dhcp-range 192.168.122.2,192.168.122.2 --dhcp-leasefile=/var/lib/libvirt/dnsmasq/default.leases --dhcp-lease-max=1 --dhcp-no-override --dhcp-hostsfile=/var/lib/libvirt/dnsmasq/default.hostsfile --addn-hosts=/var/lib/libvirt/dnsmasq/default.addnhosts
1.2. update the default network to add a static host
# virsh net-update default add ip-dhcp-host  "<host mac='52:54:00:f9:d4:63' ip='192.168.122.200' />"
Updated network default live state
# virsh net-dumpxml default
<network>
  <name>default</name>
  <uuid>a13a4e7a-31db-b59a-7a35-985bceb84000</uuid>
  <forward mode='nat'/>
  <bridge name='virbr0' stp='on' delay='0' />
  <mac address='52:54:00:F4:C7:A5'/>
  <ip address='192.168.122.1' netmask='255.255.255.0'>
    <dhcp>
      <range start='192.168.122.2' end='192.168.122.254' />
      <host mac='52:54:00:f9:d4:63' ip='192.168.122.200' />
    </dhcp>
  </ip>
</network>
#cat /var/lib/libvirt/dnsmasq/default.hostsfile
52:54:00:f9:d4:63,192.168.122.200

2. Define and start a network with no dhcp rang and static host
# virsh net-dumpxml default
<network>
  <name>default</name>
  <uuid>a13a4e7a-31db-b59a-7a35-985bceb84000</uuid>
  <forward mode='nat'/>
  <bridge name='virbr0' stp='on' delay='0' />
  <mac address='52:54:00:F4:C7:A5'/>
  <ip address='192.168.122.1' netmask='255.255.255.0'>
  </ip>
</network>
and check the dnsmasq commandline, and there's no dhcp-hostsfile and addn-hosts files
# ps aux|grep dnsmasq
nobody   23935  0.0  0.0  12880   572 ?        S    18:02   0:00 /usr/sbin/dnsmasq --strict-order --bind-interfaces --local=// --domain-needed --pid-file=/var/run/libvirt/network/default.pid --conf-file= --except-interface lo --listen-address 192.168.122.1 --addn-hosts=/var/lib/libvirt/dnsmasq/default.addnhosts
2.1 update the default network to add a static host
# virsh net-update default add ip-dhcp-host  "<host mac='52:54:00:f9:d4:63' ip='192.168.122.200' />"

# virsh net-dumpxml default
<network>
  <name>default</name>
  <uuid>a13a4e7a-31db-b59a-7a35-985bceb84000</uuid>
  <forward mode='nat'/>
  <bridge name='virbr0' stp='on' delay='0' />
  <mac address='52:54:00:F4:C7:A5'/>
  <ip address='192.168.122.1' netmask='255.255.255.0'>
    <dhcp>
      <host mac='52:54:00:f9:d4:62' ip='192.168.122.201' />
    </dhcp>
  </ip>
</network>
and dnsmasq service is restarted:
# ps aux|grep dnsmasq
nobody   24039  0.0  0.0  12884   612 ?        S    18:15   0:00 /usr/sbin/dnsmasq --strict-order --bind-interfaces --local=// --domain-needed --pid-file=/var/run/libvirt/network/default.pid --conf-file= --except-interface lo --listen-address 192.168.122.1 --dhcp-range 192.168.122.1,static --dhcp-no-override --dhcp-hostsfile=/var/lib/libvirt/dnsmasq/default.hostsfile --addn-hosts=/var/lib/libvirt/dnsmasq/default.addnhosts
2.2 update the default network to delete a static host
# virsh net-update default delete ip-dhcp-host "<host mac='52:54:00:f9:d4:62' ip='192.168.122.201' />"
Updated network default live state
# virsh net-dumpxml default
<network>
  <name>default</name>
  <uuid>a13a4e7a-31db-b59a-7a35-985bceb84000</uuid>
  <forward mode='nat'/>
  <bridge name='virbr0' stp='on' delay='0' />
  <mac address='52:54:00:F4:C7:A5'/>
  <ip address='192.168.122.1' netmask='255.255.255.0'>
  </ip>
</network>
and dnsmasq service is restarted:
# ps aux|grep dnsmasq
nobody   24206  0.0  0.0  12880   576 ?        S    18:19   0:00 /usr/sbin/dnsmasq --strict-order --bind-interfaces --local=// --domain-needed --pid-file=/var/run/libvirt/network/default.pid --conf-file= --except-interface lo --listen-address 192.168.122.1 --addn-hosts=/var/lib/libvirt/dnsmasq/default.addnhosts

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory, and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

http://rhn.redhat.com/errata/RHSA-2013-0276.html