[Distutils] Setuptools/Distribute error with 0.7.2

[Marcus Smith]

> If I recall pip hasn't handled the upgrade of distribute very well for
> awhile now but I can't see to find an existing ticket for it.
>

the older issue is that pip can't upgrade distribute in python 3 (related
to distribute requiring 2to3)
https://github.com/pypa/pip/issues/650
btw, pip-1.4 (unreleased) has new logic to skip even trying, because the
problem prevents upgrades and wheel building for projects like "pyramid"
(which formally depend on setuptools)

Marcus
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