Currently I'm using this:
f = open(filename, 'r+')
text = f.read()
text = re.sub('foobar', 'bar', text)
f.seek(0)
f.write(text)
f.close()
But the problem is that the old file is larger than the new file. So I end up with a new file that has a part of the old file on the end of it.