Add south, make manage.py executable.

To create the DB, run ./manage.py syncdb.

Thereafter, if you make changes to models, you should use:
 * edit models.py as needed
 * ./manage.py schemamigration appname description_for_change --auto
   e.g. ./manage.py contacts schemamigration add_last_name --auto

That will generate a migration file e.g. contacts/migrations/0001_add_last_name.py

To apply the change to the database:
  ./manage.py migrate

See http://south.readthedocs.org/en/latest/tutorial/part1.html for details.