1. Isolate everything with virtualenvs
2. pip and easy_install are both package managers you can use both of them but I prefer pip
3. setup.py is just a script for distutils, pip and easy_install both use setup.py to install packages.

If you run your python in virtualenvs, it will prevent you from uninstalling or updating packages that will break your system. Then the choice between pip and easy_install isn't so clear. In theory pip is newer but for some reasons the way they install packages might work on pip and not on easy_install. These problems happen when you have to deal with native libraries that have to be compiled... It's hard to say which one is better but the one that works should do the trick since they are installing package in the same directory anyway.

There is no real need to install packages with setup.py unless they aren't available in pypi. pip also happens to install packages with setup.py if you pass it the directory where it is located.

If you make a package, make sure it's installable with distutils using setup.py. Then you can release it to pypi.

Also, as I know many tutorials aren't using virtualenvs and might even write inside their tutorials things like:

sudo pip install ..
sudo easy_install ..

Note that if you're using virtualenv you should never have to use sudo, and if you do use sudo, it's possible that it will install the package system wide as it won't be runned from the user in virtualenv but from root.

Suggested reading by Lukas Graf : http://guide.python-distribute.org/introduction.html#the-packaging-ecosystem