Should I activate feature modules on my dev site? I have installed the features module on my dev site.  I am using it to store newly developed site functionality within new modules.  I then install the modules on my live site. 

I was wondering, should I activate these modules on my dev site?  I am considering not doing this, because the functionality already exists on the dev site  Activating the new features modules (that are created by functions) seems a bit redundant and even a little dangerous.
Features allows you to assure that the configuration that is described in code (in the features that you the module Features generates) is the current configuration in the DB. If you enable a feature that describes exactly the same configuration that you have in your site no changes are made.

Features is a powerfull way to move configuration between sites (dev, stg and live, between devs sites, etc). I don't understand exactly your setup, but I think you can enable them.

Features help you to know if some configuration change needs to be moved to producton. For example: you start with your features in a clean state (default state) in production and in your dev site. If you make a configuration change in your dev site implementing a new functionality you can see that the feature is in overwritten state: this means that you shold take this configuration change to production when new code is deployed. You can do it by hand, or regenerating the feature and deploying it to production.