django-admin.py / manage.py both accept a --settings=mysite.settings option. In development you could explicitly specify --settings=dev_settings. You can also set the DJANGO_SETTINGS_MODULE environment variable in your apache configuration.
Personally, I simply don't check in settings.py. Instead I check in multiple settings files (dev_settings, prod_settings, etc) and symbolically link them to settings.py as desired. This way if I simply checkout my application it won't be runnable until I think about which settings file is appropriate and actually put that settings file in place.
Another suggestion I've heard but I don't particularly like is having a settings.py that dynamically imports a dev_settings.py if it exists. While this may be more convenient I'd be concerned that it's harder to read settings.py and know what the settings will actually be without also looking for overriding values in a dev_settings.py file that may or may not exist.
