For me it got fixed by replacing python2.7 by python2.6. As per https://code.google.com/p/gyp/source/browse/trunk/DEPS#19 , it seems that gyp depends on python 2.6
On Ubuntu Saucy:
sudo add-apt-repository ppa:fkrull/deadsnakes
sudo apt-get update
sudo apt-get install python2.6
sudo update-alternatives --install /usr/bin/python python /usr/bin/python2.6 20
sudo update-alternatives --install /usr/bin/python python /usr/bin/python2.7 10
you can switch between 2.6 & 2.7 using:
sudo update-alternatives --config python
I hope this helps somebody. [nodejs/node-gyp#363]