wildcard subdomains for wordpress network

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http://serverfault.com – tyring to set up wildcard subdomains for wordpress 3 on localhost in Ubuntu 11 and no idea how to go about debugging this. Wordpress and wildcards seem to be set up correctly. If I create /var/www/domain/test.domain then that subdomain works. The wordpress network settings are working on their end, with all the network options available and can create a new site. But when I create a new site in wordpress I get a 404 not found. I set up dns according to this: http://ubuntuforums.org/archive/index.php/t-1719832.html the only difference is with the domain name. So my entry to /etc/dnsmasq.d/ (HowTos)