Error: A 0.7-series setuptools cannot be installed with distribute

When trying to install Astropy from the latest master (b32293e58319be23528787b62d1cf7cd0e5fd46f) on my system, I get:

```
Traceback (most recent call last):
  File "setup.py", line 41, in <module>
    exec(open(init_path).read(), d)
  File "<string>", line 8, in <module>
  File "build/src/setuptools/__init__.py", line 2, in <module>
    from setuptools.extension import Extension, Library
  File "build/src/setuptools/extension.py", line 5, in <module>
    from setuptools.dist import _get_unpatched
  File "build/src/setuptools/dist.py", line 6, in <module>
    from setuptools.command.install import install
  File "build/src/setuptools/command/__init__.py", line 8, in <module>
    from setuptools.command import install_scripts
  File "build/src/setuptools/command/install_scripts.py", line 3, in <module>
    from pkg_resources import Distribution, PathMetadata, ensure_directory
  File "build/src/pkg_resources.py", line 2836, in <module>
    add_activation_listener(lambda dist: dist.activate())
  File "build/src/pkg_resources.py", line 704, in subscribe
    callback(dist)
  File "build/src/pkg_resources.py", line 2836, in <lambda>
    add_activation_listener(lambda dist: dist.activate())
  File "build/src/pkg_resources.py", line 2260, in activate
    self.insert_on(path)
  File "build/src/pkg_resources.py", line 2361, in insert_on
    "with distribute. Found one at %s" % str(self.location))
ValueError: A 0.7-series setuptools cannot be installed with distribute. Found one at /opt/local/Library/Frameworks/Python.framework/Versions/3.2/lib/python3.2/site-packages
/Volumes/Raptor/Dropbox/Code/development/astropy/astropy/distribute-0.6.28-py3.2.egg
```

Likely a consequence of the setuptools and distribute merger...