update the python path at the start of the dev_appserver.py script if you've installed python2.5 so that it is not the default python instance
sudo chmod 777 google_appengine/dev_appserver.py
#!/usr/bin/python2.5
also [2010.07.11 21:07:33] having trouble getting things to run with stock build of 2.5 it at least launched with 2.6