Thanks for the links. I always thought of using css media queries as cheating somehow, but I suppose it makes sense to create actually attractive and useful designs which can scale down elegantly.
Not at all! The most ideal way to use them is to design a site for mobile, then using media queries to detect larger screen sizes and adapt those for desktop - this will give you support for older mobile browsers that do not support media queries. All modern browsers support them and if you want to support IE8 and less you can resort to using conditional if statements to serve non-media query based css.
As for simulating a mobile device, thanks for the advice. I'm running Debian Squeeze at the moment, so I'll have to update my Chromium to get the developer tools with exciting device metrics options - thanks for pointing that out.
You'll probably be fine with Chrome developer tools. There are lots of useful features tucked in it now for mobile development.
I'd also suggest testing in: http://iphone4simulator.com/
You'll probably only need the simulator if you encounter very device specific bugs.