A LAMP server is used for development and testing. The components were installed one by one using apt-get.
The Ubuntu help page at https://help.ubuntu.com/community/ApacheMySQLPHP was the main reference used.
Version control is done with Subversion. The excellent guide at https://help.ubuntu.com/community/Subversion is very easy to follow and helps get Subversion up and running in no time. The command line client is used. The full ebook which explains Subversion and the commands can be found at http://svnbook.red-bean.com/
As I wanted to use version control with the theme’s code, a separate folder was created for this purpose, with the svn recommended structure of tag/ branch/ trunk/ folders. A symbolic link was then created from the wp-content/themes folder to the working copy. Changes made to the code can be seen immediately when the webpage is refreshed. If necessary, the symbolic link can be switched to either the branch/ or tag/ folders.
This post is actually a little late, and at the time of posting, WordPress 3.0.5 has just been released. In the process of updating, I discovered that WP can be updated with svn. The steps listed at http://codex.wordpress.org/Installing/Updating_WordPress_with_Subversion on how to convert a traditional install to svn are very easy to follow. The copies of WordPress on my development server and live server are now setup to use this method.