Some places with help on $PS1:

•  http://wiki.archlinux.org/index.php/Color_Bash_Prompt
•  http://www.ibm.com/developerworks/linux/library/l-tip-prompt/

A pretty reasonable prompt for my taste has been:

export PS1="(\[\e[34m\]\u@\h:\[\e[31m\]\W\[\e[0m\]) "

PS1="\[\033]0;basename \"$VIRTUAL_ENV\"\007\]$PS1"

ipython

The full mod to the ipython executable is adding:

elif [ "$TERM" = "xterm" ]; then
    # if we're in an xterm make the env name be in the title or tab 
    PS1="\[\033]0;`basename \"$VIRTUAL_ENV\"`\007\]$PS1"

to the "PS1" section and

        if [ "$TERM" = "xterm" ]; then
            # if we're in an xterm make the env name be in the title or tab 
            echo -ne "\033]0;Default\007"
        fi

to the deactivate section