Sorry backwards; it should be
"hosts: files dns"
Check your /etc/nsswitch.conf file to be sure it has"hosts: dns files" wrong see above
Reference: http://www.faqs.org/docs/securing/chap6sec71.html
Then ping each server before trying to reconnect with ssh.
I am pretty sure that this will work now that you have them both on the same network.
Be sure you don't have any iptables running denying your port 22 on both servers!