Unable to connect to localhost in Debian 6?

Hello Everyone,

I have unable to run the default server with localhost in my Debian machine. While trying to run Django I get:

Error: That IP address can't be assigned-to.

error
While trying to run galaxy-dist I get this error:

socket.error: [Errno 99] Cannot assign requested address

I can't telnet or ping localhost(127.0.0.1)
My /etc/hosts file looks like this:

127.0.0.1	localhost
127.0.1.1	sachitad.localdomain	sachitad 
# The following lines are desirable for IPv6 capable hosts
::1     ip6-localhost ip6-loopback
fe00::0 ip6-localnet
ff00::0 ip6-mcastprefix
ff02::1 ip6-allnodes
ff02::2 ip6-allrouters
ff02::3 ip6-allhosts

How can I solve this issue? Thanks

what is the output of

ifconfig -a
th0      Link encap:Ethernet  HWaddr 00:1c:23:07:cd:22  
          UP BROADCAST MULTICAST  MTU:1500  Metric:1
          RX packets:0 errors:0 dropped:0 overruns:0 frame:0
          TX packets:0 errors:0 dropped:0 overruns:0 carrier:0
          collisions:0 txqueuelen:1000 
          RX bytes:0 (0.0 B)  TX bytes:0 (0.0 B)
          Interrupt:18 

eth1      Link encap:Ethernet  HWaddr 00:1c:26:06:3a:00  
          inet addr:172.16.0.147  Bcast:172.16.0.255  Mask:255.255.255.0
          inet6 addr: fe80::21c:26ff:fe06:3a00/64 Scope:Link
          UP BROADCAST RUNNING MULTICAST  MTU:1500  Metric:1
          RX packets:3207 errors:0 dropped:0 overruns:0 frame:2186
          TX packets:3278 errors:6 dropped:0 overruns:0 carrier:0
          collisions:0 txqueuelen:1000 
          RX bytes:2196675 (2.0 MiB)  TX bytes:744554 (727.1 KiB)
          Interrupt:17 Base address:0xc000 

lo        Link encap:Local Loopback  
          LOOPBACK  MTU:16436  Metric:1
          RX packets:0 errors:0 dropped:0 overruns:0 frame:0
          TX packets:0 errors:0 dropped:0 overruns:0 carrier:0
          collisions:0 txqueuelen:0 
          RX bytes:0 (0.0 B)  TX bytes:0 (0.0 B)

Your loopback is not up. You need to have something like the following

auto lo
iface lo inet loopback

in your /etc/network/interfaces.