diff -urN src.orig/readconf.c src/readconf.c
--- src.orig/readconf.c	Thu Aug 23 14:01:49 2007
+++ src/readconf.c	Sat Mar 29 19:32:21 2008
@@ -2904,6 +2904,8 @@
     }
 
   primary_hostname = string_copy(hostname);
+  } else {
+    primary_hostname = expand_string(primary_hostname);
   }
 
 /* Set up default value for smtp_active_hostname */