I need to set up a development server for my team including programmers and database administrators. I wonder which version of SQL Server 2014 I should install on the development server. I was told that developer version is enough and will be installed on each developer's machine. But don't we need to have a SQL Server (engine) set up so developers will connect to the server through the client (Management Studio)?
Thank you!
There are two parts to your question.
The features of SQL Server Developer Edition are identical to the features in Enterprise. The only difference is Developer edition is not license for production use. In addition, the SQL Server Developer software isn't technically licensed, each developer that uses the software must have a developer license.
See here for more info:
https://dba.stackexchange.com/questions/37149/when-is-it-appropriate-to-use-sql-server-developer-edition
Additionally, you talked about installing the software on every user's machine. While each user may not have the SQL Server Engine installed on their workstation, they will at least need SSMS (and SSDT if your shop will be using Integration Services).
So to recap, Developer is basically Enterprise, except you can't use it for production and you must have a license per developer that accesses the software. And, you should definitely be installing the SQL Server Engine on hardware close to what you'll have in production, but everyone will need SSMS and potentially SSDT on their desktops.
EDIT: And of course, the official word can be found on Microsoft's page.