ActivePython users on Linux or MacOSX may have noted that the arrow keys do not work properly in the command-line Python shell. When you hit up-arrow in the shell, ActivePython gives you "^
Fortunately, ActivePython comes with PyPM (Python Package Manager), using which you can install readline yourself. While you're doing that, you might also want to try IPython, which provides tab completion and a number of other nifty features.
If you are using Linux or MacOSX, then all you need to do is type the following in Terminal:
$ pypm install readline
$ pypm install ipython
On Windows, in the command prompt window:
C:\> pypm install pyreadline
C:\> pypm install ipython