If you are having trouble with multiple instances of Python (2.4, 2.5, 2.6) running on the same instance, or have development libraries that you want to try out but not necessarily add to the main python libs.. then virtualenv seems to be a good solutions, though it has its share of problems.
But basically the combination of virtualenv and easy_install, allows you to create a separate working instance of python on your machine, into which you can install whatever libraries you need. You can even think of it as being analogous to the setup in a virtual hosting environment. You install the libraries you need and run the code. When you are done you can even move/remove the virtual host, but it does not effect the system wide libraries etc.
Both virtualenv and easy_install are available on pypi.python.org (The Cheeseshop).
easy_install also appears to have a replacement in pip, though I haven't used it much myself. I have been reading good things about it.
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