So far I've been trying to do development on my Nokia E61 phone hand-set. Having got caught up by the pain of trying to view the PDF of the API documentation on the phone I've decided to relax the rules of my challenge somewhat. As I've got a Debian virtual host from Rimu Hosting. I'm going to extend the definition of "using the phone as a development environment", to include connecting to a Linux box from the phone.
I had SSH set up already on the server so I grabbed the Symbian port of putty from http://s2putty.sourceforge.net/
The install was very smooth over-the-air. To my shame I don't have the public-key authentication turned on, but then my server doesn't hold anything valuable. The putty implementation is very good. The most important thing to learn is that to send a TAB character you need to press CTRL-i, that way you can do the tab-completion in bash and save yourself a lot of typing. Other odd characters I grab from the "Chr" menu button so that I can get the angle-brackets and pipe-character.
The other key that causes problems is the escape-key. This is a particular problem when editing with vi. The only way I've found to do this is to use the putty menu to send a special character. This slows me down a bit but is not the end of the world.
With the putty client set-up I have given myself a way out of dead-ends on the phone alone. Now I'm going to see if I can get the Nokia python API docs in a phone-readable form.