Q: How do you titilate an ocelot?
A: Oscillate it's tits a lot.

I thank you.

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.