Developing a mobile website I am using mobile tools module. It asks for path of mobile website. Does it mean that i need to develop mobile based pages again? i.e one for mobile and another for desktop ?
Mobile tools will let you differentiate between what you consider to be your 'desktop' version and your 'mobile' version via the theme you choose.  For example, www.example.org as your desktop and m.example.org as your mobile.

Mobile tools will try to redirect based on device detection, if you configure it that way.  If you want the desktop version to show on all devices, computer and mobile, you can configure it that way as well, or include the desktop version for 'desktop and mobile.'

But, if you do want a separate mobile theme, there are several existing mobile themes out for drupal.  To make that work you would have to install and enable the mobile theme, and then mobile tools will automatically select that theme when it detects the mobile based site.

Whatever version of the site you want to display on any device is very possible. It's just according to your goals for each device.