The "right" way to distribute Python packages seems to have moved on since I last checked. There seem to be two parallel efforts, Tarek Ziadé's Distutils2 and Ian Bicking's pip. Tarek has a nice summary of the state of affairs as of March 2010. His summary refers confused developers to the Hitchhiker's Guide to Packaging which describes the evolution of Python packaging sytems and gives lots of helpful packaging advice. The technical details of the new packaging framework are described in PEP 376 slated for inclusion in Python 2.7 and 3.2.
I'm not sure how Ian has
pip fitting into this, except that he
wants to stay out of the stdlib.