I go for having a settings module which imports different things depending on what's available. For example, you can define host-specific settings based on hostname for different production servers (or production, staging, QA, etc), or just a 'local.py' for development. Regardless of what's imported, that file starts with "from base import *" which is where the main settings are.

For the curious, since everyone has their own way of doing this, my new-project init script is here: http://github.com/tvon/gig