Ghost droplet doesn't resolve DNS

I fired up a Ghost (Ubuntu 14.04) droplet recently, and tried to switch my domain over to it. It was previously on Amazon Route 53, but I deleted that hosted zone, then switched the nameservers over to these guys at the registrat (iwantmyname):

ns1.digitalocean.com
ns2.digitalocean.com
ns3.digitalocean.com

I also changed the nginx ghost file and the config.js file:

server {
    listen 80 default_server;
    listen [::]:80 default_server ipv6only=on;

    server_name mydomain.io ;

    root /usr/share/nginx/html;
    index index.html index.htm;

    client_max_body_size 10G;

    location / {
        proxy_pass http://localhost:2368;
        proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;
        proxy_set_header Host $http_host;
        proxy_set_header X-Forwarded-Proto $scheme;
        proxy_buffering off;
    }
}

And then the config.js file:

var path = require('path'),
    config;

config = {
    // ### Production
    // When running Ghost in the wild, use the production environment
    // Configure your URL and mail settings here
    production: {
        url: 'http://mydomain.io',
        mail: {
          transport: 'SMTP',
           host: 'smtp.mandrillapp.com',
        options: {
                service: 'Mandrill',
                auth: {
            user: 'email',
            pass: 'key',
        },
    },
},

No luck though. When I use host mydomain.io it shows this:

Host thecraft.io not found: 2(SERVFAIL)

And when I check the ip address it shows this:

Host 242.238.236.104.in-addr.arpa. not found: 3(NXDOMAIN)

Any ideas?