I got the answer from VMware support. This is what I did to fix it.
edit /etc/sysconfig/networking/devices/ifcfg-eth0
- Insert: HOSTNAME='newname.fqdn' (before IPADDR line)
- Save and Quit
Run: /opt/VMware/share/vami/vami_config_net and change hostname
Check /etc/hosts and make sure the name changed
Run the web admin and go to the Admin page and set "yes" to "Certificate Regeneration Enabled"
Reboot and the new name will stick now.
Seems to be a bug or an "undocumented feature" and support is checking with developers on why it is happening, since it is not happening on their own internal servers.