It's definitely possible. All the packages you need are available at repository.maemo.org (for example, you can get gcc at http://repository.maemo.org/pool/maemo1.1rc7/free/g/ ). Developers more commonly build on a PC and test there as well (see developer information on www.maemo.org), but for certain development tasks, it may be more convenient to build on the device itself.

AaronL