Sorry for the Windows developers out there, this solution is for Macs only.

This set of applications accounts for: Usability Testing, Screen Capture (Video and Still), Version Control, Task Lists, Bug Tracking, a Developer IDE, a Web Server, A Blog, Shared Doc Editing on the Web, Team and individual Chat, Email, Databases and Continuous Integration. This does assume your team members provide their own machines, and one person has a spare old computer to be the Source Repository and Web Server. All for under $200 bucks.

Usability

Silverback

Licenses = 3 x $49.95

"Spontaneous, unobtrusive usability testing software for designers and developers."

Source Control Server and Clients (multiple options)

Subversion = Free

Subversion is an open source version control system.

Versions (Currently in Beta) = Free

Versions provides a pleasant work with Subversion on your Mac.

Diffly = Free

"Diffly is a tool for exploring Subversion working copies. It shows all files with changes and, clicking on a file, shows a highlighted view of the changes for that file. When you are ready to commit Diffly makes it easy to select the files you want to check-in and assemble a useful commit message."

Bug/Feature/Defect Tracking (multiple options)

Bugzilla = Free

Bugzilla is a "Defect Tracking System" or "Bug-Tracking System". Defect Tracking Systems allow individual or groups of developers to keep track of outstanding bugs in their product effectively. Most commercial defect-tracking software vendors charge enormous licensing fees.

Trac = Free

Trac is an enhanced wiki and issue tracking system for software development projects.

Database Server & Clients

MySQL = Free

CocoaMySQL = Free

Web Server

Apache = Free

Development and Build Tools

XCode = Free

CruiseControl = Free

CruiseControl is a framework for a continuous build process. It includes, but is not limited to, plugins for email notification, Ant, and various source control tools. A web interface is provided to view the details of the current and previous builds.

Collaboration Tools

Writeboard = Free

Ta-da List = Free

Campfire Chat for 4 users = Free

WordPress = Free

"WordPress is a state-of-the-art publishing platform with a focus on aesthetics, web standards, and usability. WordPress is both free and priceless at the same time."

Gmail = Free

"Gmail is a new kind of webmail, built on the idea that email can be more intuitive, efficient, and useful."

Screen Capture (Video / Still)

Jing = Free

"The concept of Jing is the always-ready program that instantly captures and shares images and video…from your computer to anywhere."

Lots of great responses:

TeamCity [Yo|||]

Skype [Eric DeLabar]

FogBugz [chakrit]

IChatAV and Screen Sharing (built-in to OS) [amrox]

Google Docs [amrox]