Chrome caches DNS records and tends to ignore changes to the hosts file after it has successfully connected to my site (barring a restart). With DNS pre-fetching enabled, it is
This is probably a real bug in Google Chrome. I created http://crbug.com/65570 to track it, but please add any additional information you can think of to the bug so we're sure we understand your problem correctly.
It sounds as though the only work-around besides closing Chrome is unplugging the network cable and then plugging it back in. When Chrome sees such an event, it drops its socket and dns cache. The correct solution for the bug is likely to do the same when we see /etc/hosts has changed.
If you'd like to know when the bug is fixed, go to http://crbug.com/65570 and click the star next to the bug number. And, like I said, please add any additional information you can to the bug.