For my current project, i was required to develop a sandbox web part. Normally i would just develop it in visual studio in my sharepoint vm. Working in the sharepoint vm though is not that fun, it can't use your local computer's full resources. Visual studio seems to lag when IIS takes all the memory.
The process I was using was:
1. Compile in VS
2. Package in VS
3. De-activate in Browser
4. Upload in Browser
5. Activate in Browser
6. Test in Browser
It would work a whole lot better if I could do that locally. If it was possible. With MOSS 2007 you could not open the sharepoint project on a machine without sharepoint, basically because vseex would not install. But now you can, as you can deploy the sharepoint components to a machine that does not have sharepoint installed.
When i tried to package initially though, it failed with a generic package failed error
By chance i figured out that if you delete the csproject.user file, visual studio 2010 will package the sharepoint wsp. When you dont have a csproject.user opening the project will show this error, which is what you want.
The Site URL property of the project has not been set. In the Properties window, enter the URL for the local SharePoint server.