According to setuptools documentation, setup.py develop is supposed to create the egg-link file and update easy_install.pth when installing into site-packages folder. However, in my case it's only creating the egg-link file. How does setuptools decide if it needs to update easy_install.pth?
Some more info: It works when I have setuptools 0.6c7 installed as a folder under site-packages. But when I use setuptools 0.6c9 installed as a zipped egg, it does not work.