Creating new blogs don't work

I have most of my test wordpress mu site setup but it isn't creating new blog site, goes through the motions but no subdomain site exists, I'm stumped, my site is http://howhat.org signup page is here http://howhat.org/wp-signup.php

I have a feeling it's the config file but not quite sure, would think any sub domain addition would involve DNS, I'm surprised it doesn't any tips in fixing this would be appreciated