I actually make a terminal-window-size PNG of 'PRODUCTION' and 'TEST' and set it as the background gif at like 10% alpha in the terminal windows, which also have different background colors.
I set the background colour in our team's shared iTerm config. Green for CI, blue for the test server, yellow for staging, and we don't have access to production!
The thing I like about our setup is that it's completely independent of individual developers' setups. Some of us use iterm, some of us are okay with terminal.app (iterm 2 ftw!). All of the backend capable folks (three of us) do have access to production, but we use it very responsibly (helped by the white on a red background production in the console prompt)
