update: I was using an older version of Pyramid, the documentation is up to date for the latest version.
Following the pyramid docs at http://docs.pylonshq.com/pyramid/dev/narr/project.html in the 'Interactive Shell' section the instructions there mention using '../bin/paster pshell development.ini MyProject' to launch an interactive shell, this did not work for me. It returned the following error:
Command 'pshell' not known (you may need to run setup.py egg_info)
Instead I had to make use of the paster --plugin option.
paster --plugin=Pyramid pshell development.ini main
It seems that the app generated by the paster -t pyramid_starter command gets the name 'main' in the development.ini. Additionally the pshell command did not work until I specified --plugin=Pyramid. (maybe I'm using an older version of Pyramid).