Local Installation of WordPress 3.0 (Multisite)

I would like to install WordPress 3.0 on my laptop (for testing purposes) and enable the multisite capabilities. It seems I have to create a virtual domain such as localhost.mydomain. And than follow the instructions on Codex to “Create a Network”.

I would like to use subdomains such as blog1.localhost.mydomain. But on a local installation I have to manually add the subdomain to the hosts file each time. Are there other issues with choosing subdomains instead of subdirectories.