I frequently find myself encountering problems (usually permissions) when trying to setup a local development server. Or creating a new site (alias).
Very common problem is I need to allow
www-data (Apache use on ubuntu) access to all directories leading to the working directory.
Another problem is since I am logged in as my personal user
jiewmeng, when I create new files, they are owned by me, and sometimes, Apache can't read/write to it.
How is your local development setup like? I am using Ubuntu 11.10.