As a developer, what will I miss on a Macbook Air? [MBA vs MBP]
You'll do just fine with a MacBook Air, at least, that's what I'd go for (and I'm in love with the Air as well :))


  I will miss the DVD drive, and upgrade ability if I am choosing a
  Macbook Air over Macbook Pro or a Thinkpad Machine?


Who uses a drive more then 2 times a year these days? I don't and I think most of the Mac users don't. And if you really need one, you can try Apple's USB Superdrive or if you don't want to pay, you can try the DVD and CD sharing within Mac OS X.


  Is the form factor and backup time, worth the choice?


It's the smallest notebook of the two (MacBook Air vs. MacBook Pro), so form factor will do just fine. About the back-up time, I'm not sure what you mean, but as it's all Flash storage inside, reading and writing to the hard drive will go extremely fast.


  Is it good for iPhone/Android Development?


Yep. It's full size keyboard and gorgeous screen will allow you to do everything you can on a MacBook Pro, but you'll have a lighter and smaller notebook.


  Will I be able to run my favorite Open Source tools from Ubuntu, like
  GIMP/Blender etc.,? If not will I be able to dual boot Ubuntu? (I know
  I can do Windows)


You'll be able to dual boot Ubuntu without any hassle. Here is a good tutorial how to install it using a Flash drive