This is a list of tools you may find useful in your development of MicroLua homebrews.
I am pretty sure I don't need to tell you which editor to use. Notepad++ is very good at doing this on Windows (you can even add MicroLua's API to its code highlighting). For Linux, any Gedit, Vim, Emacs etc. will do the job.
Photofiltre, even in its free version can be quite efficient for this and produce low-res images that fit perfectly the Nintendo DS. I guess Gimp or Paint.NET will do the job too.
Audiocity is probably the best software you can use for this. It can export your sounds in a MOD format so its perfect for MicroLua. Look at the Sound tutorial to learn more, including how to make a sound database for MicroLua.
If you are looking for a way of testing the code on computer, look at either DeSmuME or MicroLua Simulator. Maybe Dualis can help you too.
We are currently using Git to version the sources of MicroLua, but you can also use SVN if you prefer.
There are many public repository services throughout the Internet, for instance GitHub which is especially designed for Git.
For testing your scripts on the console without having to scratch your linker every time you need to update the files, try MicroFileServer which ease transfering MicroLua scripts between the computer and the console via Wifi connection.
The best homebrew to make MicroLua scripts on your console is the Lua Editor reprise by geeker, known as LED RGB. It is about as effective as any computer editor and provides instant testing of course.
There are a lot of them, all having cons.
It is quite complicated to both create music and make it so MicroLua can play it. µLua actually needs your MOD and WAV files to be included in a BIN file which acts as a sound database. This conversion can only be made on the computer so you will have to put back your creations on your big machine anyway.