I don't think they actually get hallucinations....it's more like magical thinking closer to delusions that define their psychosis. They can have illusions but that's is where one stimulus turns into something else rather than having something happen in isolation. So hearing the tea kettle may sound like a baby crying vs hearing a baby crying in the absence of any sound...

I'm not 100% though because a lot of docs are flexible in their definitions and I haven't seen the dsm v passage on that one yet.