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As others have said, you'll need some kind of source control (SVN probably - easier to understand and will let the students concentrate on the tasks rather than the tools). Then you'll need a voice link. Either telephone, Skype or a SIP-compliant VOIP thing. IM would be useful for communication between one pair and other pairs.

Then an IDE with collaborative editing. Netbeans has it built in apparently, but I haven't tried it. Eclipse has a number of plugins to facilitate collaborative coding:

Shareclipse: Does voice and video inside Eclipse, but projects not genuinely shared. Project might be dormant. linky

Saros: Does voice, but not video. Whole project shared. Uses a local IRC server, like XMPP or Jabber. Great demo vid. linky

Xeclip: Dependent on CVS and costs $$s. linky

XPairtise: Shares both code and code/test execution. Shared whiteboard. Needs a server in your intranet. Doesn't highlight users' cursors in different colours. linky

XCDE: Uses a intranet-local server. Shares bookmarks and tasks too in Eclipse. Has integrated voice (but requires JMF). Project might be dormant. linky

Other projects which look very dormant or incomplete: PEP, Sangam. Me, I'm planning to try Saros.

2004 called; they want their Java 'ecosystem' back.

[sarcasm]
A programming editor with stupid integrated chat?

You're right! Nobody what's that. A good open source IDE that is killing this product only has useful plugins like:
Messenger plugin: http://sourceforge.net/projects/eimp/
Gmail plugin: http://tabaquismo.freehosting.net/ignacio/eclipse/gmailclipse/gmail-eclipse.htm
Personal finance plugin: http://www.eclipseplugincentral.com/Web_Links-index-req-viewlink-cid-589.html
Minesweeper, snake and sobokan games: http://www.eclipseplugincentral.com/Web_Links-index-req-viewlink-cid-52.html

...?
[/sarcasm]

[sarcasm]
A programming editor with stupid integrated chat?

You're right! Nobody what's that. A good open source IDE that is killing this product only has useful plugins like:
Messenger plugin: http://sourceforge.net/projects/eimp/
Gmail plugin: http://tabaquismo.freehosting.net/ignacio/eclipse/gmailclipse/gmail-eclipse.htm
Personal finance plugin: http://www.eclipseplugincentral.com/Web_Links-index-req-viewlink-cid-589.html
Minesweeper, snake and sobokan games: http://www.eclipseplugincentral.com/Web_Links-index-req-viewlink-cid-52.html

...?
[/sarcasm]

Sorry, I don't think I was clear in my last post; Emonic is a third party plugin. There are also a great number of other plugins.

Can I be the one?

And last, VS integration with tools that are not MS sucks.

So, when was the last time you used eclipse?

here it is.

Well, although its just a JRE, I find that Eclipse runs fine using the blackdown JRE. I haven't developed using the blackdown sdk, but I'd consider running eclipse just fine at least one point in favor of blackdown's usabiliy as a Java environment.

Secondly, Eclipse is more than a Java IDE. It has so many damn plugins it literally is a swiss army knife, albeit a bloated one. I personally use pydev for eclipse as my python editor.

See the history of Eclipse foundation and the add-in providers list (which may be out of date; dunno).

Eclipse is great. It comes with best-of-breed Java development tools (JDT) and you can get C/C++ tooling (CDT) and tooling for other languages, to add to it. There's also lots of plugins written by 3rd parties. Much of the development work on Eclipse is done by IBM, but many other companies are involved. I believe QNX is heavily involved in the CDT project, for example. Anybody can write their own plugins for Eclipse. The platform is fully open and freely available, and you can use it to create your own "rich client" applications in Java that use the SWT native widget toolkit and look and feel like professional applications (unlike Swing applications which always feel clunky and "wrong" when you use them).

Just yesterday I discovered the PyDev project, which provides Python integration in Eclipse. I only tried it briefly but it looks great. The two things that caught my eye are (1) you can debug Python applications with the Eclipse debugger just like you would debug Java or C/C++ applications, and (2) the Python editor supports code assist.