Personally I edit the code on my mac using gvim and run and use git on the VM. I've used ExpanDrive to mount the directory from the VM for editing previously but I've been moving towards using vagrant with it's NFS shares.

The way I do it is to write all of the code locally and use git/svn/hg/whatever locally. I then rsync my changes to the virtual machine when I'm ready to test.

I keep all my code locally and have my testing machine (in my case an old laptop but should work the same with VM) map to that dir, so the server is alwas running the code that I am working on, no syncronization step slowing me down. :)