I had trouble getting emacs' windmove mode working right under Mavericks' terminal app. It seems that the terminal app does not have a keyboard mapping for S-up and S-down. For posterity's sake, here is what I did.
First, I had to add these to terminal's keyboard map:
shift cursor up: \033[1;2A
shift cursor down: \033[1;2B
Then, in my init.el, I had to add:
(define-key input-decode-map "\e[1;2A" [S-up])
I'm sure there's got to be an easier way to do this, but this got me running.