Turns out that disabling dnsmasq (as described in http://www.stgraber.org/2012/02/24/dns-in-ubuntu-12-04/ - just disable it in /etc/NetworkManager/NetworkManager.conf) and turning off natdnshostresolver1 in my VM got me the desired behavior back.
Turns out that disabling dnsmasq (as described in http:// www.stgraber. org/2012/ 02/24/dns- in-ubuntu- 12-04/ - just disable it in /etc/NetworkMan ager/NetworkMan ager.conf) and turning off natdnshostresolver1 in my VM got me the desired behavior back.