I suspect your VirtualHost is not getting processed correctly, which would then not set AllowOverride for the get requests. First your /etc/hosts file should look like this..

127.0.0.1 localhost localhost.localdomain 127.0.1.1 nibble.local 

Second, You must have that interface set for name based vhosts. Usually its set in the main apache config, I'm guessing ubuntu/debian has that file located /etc/apache2/apache2.conf. Make sure this line is set somewhere in that file,

NameVirtualHost *:80 

Once you make these changes, restart apache

sudo /etc/init.d/apache2 restart 

Noe test it out, remember you only set that hosts entry locally. So as is this will only work correctly when requested from localhost. If you get stuck, or it doesn't work, post the relevant lines from /var/log/apache2/error.log

I suspect your VirtualHost is not getting processed correctly, which would then not set AllowOverride for the get requests. First your /etc/hosts file should look like this..

127.0.0.1 localhost localhost.localdomain 127.0.1.1 nibble.local 

Second, You must have that interface set for namebased vhosts. You did not specify if you have it currently set. Usually its set in the main apache config, I'm guessing ubuntu/debian has that file located /etc/apache2/apache2.conf. Make sure this line is set somewhere in that file,

NameVirtualHost *:80 

Once you make these changes, restart apache

sudo /etc/init.d/apache2 restart 

Noe test it out, remember you only set that hosts entry locally. So as is this will only work correctly when requested from localhost. If you get stuck, or it doesn't work, post the relevant lines from /var/log/apache2/error.log