I'm running OS X 10.7 Lion. Today I'm working on some database-heavy code that also creates lots of watchdog entries. So I decided to turn off Drupal's database logging and turn on syslog.
I created a file for the log entries to go into:
sudo touch /var/log/drupal.log
I added one line to /etc/syslog.conf to tell OS X to put messages coming to the local3 logging facility into the new file.