Internal flights in India have seen a massive growth in the last few years (since the skies were opened up). Carriers like Kingfisher, Indigo, Jet, Indian Airlines, Deccan run well priced, efficient and generally excellent quality flights from one city to another across the vast network of Indian cities. There are very competitive, frequent and it is again worth shopping around. On the whole our feelings were that Kingfisher offer the best experience on the flight and Indigo were the most efficient - but you hear different stories when you talk to different people.
Do not think of driving in India - get a car and a driver from the hotel (or possibly the company you are visiting) and rely on them to get you over the pot holes, through the traffic, around the tuk-tuks (the three wheeled auto rickshaws) and past the pedestrians. Do not be surprised to be met at the airport by the person you will meet with the next day, possibly for a meal. Building personal relationships, as we talk about elsewhere on the site, is central to building business relationships.