Unless you're a masochistic kind of person and really love typing a lot on the small keyboard, I'd recommend using your pc for developing. Here's my setup, for inspiration:

All my files are on the phone. I'm running Ubuntu on my laptop. I start by connecting the pc and n900 to the same wireless network.

Then I start a terminal on the pc and SSH from the laptop into the phone (requires ssh-server on the phone, get it from the repos). I also SFTP from pc to phone to access the files on the phone [1].

Now I'm able to work directly on the phone from my laptop. When running my python scripts in the terminal via SSH, if there's any sort of GUI, it will happen on the phone display, as if it was run from the phone itself.

That way, I always have the files with me on the phone [2]. But when I'm at home (or somewhere else with a computer), I'm able to do the development without having to type on the small phone keyboard.

It's a very simple way to do it, without any complex SDK's and IDE's. I'm just using my favorite text editor.

[1] Theoretically, the pc and the phone doesn't have to be on the same network. If the pc is on the internet and the phone is too, via a 3G connection, it should also be possible to SSH/SFTP to the phone. But the connection may not be as stable/fast as when on a local network.

[2] I keep most of my python files in a subversion repository on a server. The files on my phone are under SVN version control. Besides the fact that version control is a good thing, my files are not completely lost if I loose my phone.