DNS misconfiguration in Plesk

I run a VPS (Virtual Private Server) through the 1&1 webhost, and was trying to create a new subdomain today using the Plesk 9.5.2 admin interface. This is an easy task which I have done many times before, but this time it failed, and gave me the following error message:

Service is not available now, probably your Plesk is misconfigured.
Contact Your provider for details.
Internal Plesk error occurred: dnsmng::update() failed: dnsmng failed: dnsmng: Empty fields 'host' or 'opt' in PTR record

Panic! I had no idea what to do, and web-searches provided very little information. However, I was able to find enough information to figure out the solution.
Read more DNS misconfiguration in Plesk