Ok your device must be rooted

follow androidandme.com

then

on the device settings, Applications,
Unknown sources – yes
Development, USB debugging – Yes

then

If your Nexus one is rooted, then

adb-windows.exe pull system/etc/hosts hosts
modify it
adb-windows.exe remount
adb-windows.exe push hosts system/etc/hosts

If its not rooted, then i doubt you will be able modify it.