Rob Allen has posted some notes to his site helping you get PHP set up on OSX Lion (10.8) successfully.

With OS X 10.8, Apple continues to ship PHP 5.3 with Xdebug, PEAR, GD and PDO_MYSQL. This is how to set it up from a clean install of 10.8.

He's broken it up into a few sections including the MySQL setup, Apache configuration , updating the main php.ini and setting up PHPUnit ("and friends") for your testing. He also includes setup instructions for the mcrypt and the PECL OAuth extensions.