I am using python 2.6 in a virtualenv on an Ubuntu Linux 11.04 (natty) machine. I have this code in my (django) python code:

import pdb ; pdb.set_trace()

in order to launch the python debugger (pdb).

Up until today, this worked fine. But now when the pdb starts, it works for debugging and running and breakpoints etc, but when I press the up arrow to show the previous command it prints ^[[A instead an doesn't go up. When I type something and press Home, it prints ^[OH instead of moving the cursor.

I can use up/home/etc. fine in the bash terminal which launches my python django unittests (which has the pdb call).

What's going on? How do I fix my pdb? What's wrong with my readline?

Looks like from some reason you are missing the readline package. Simply install it by typing pip install readline and it should behave as expected. Remember to type it as superuser if you're not in venv.