I am unsure which of the two I should go for. Flup or modwsgi. 
Flup seems to have very little documentation and even less people adding to the code. modwsgi on the other hand seems to be widely supported. 
I just want to start running my webpy environmental so that I can utilize Python scripts online. But this thing stops me from moving ahead. Any suggestions?
I use nginx and uwsgi to deploy my own web.py apps, seems faster and consumes less ram than apache+mod_wsgi, the setup is not as easy though. I have to run supervisord to ensure that all uwsgi processes are on.
Don't use flup, I think its considered to be a bit outdated way of deploying python web apps.
Python 2.7 with Webpy - flup or modwsgi?