Okay, here's my slept-on-it version, with bonus wisdom gleaned from ungemmed. I succeeded in getting rid of the stored boolean and made the initial variable assignments a little less hackish. Hopefully. :)

def find_nth_prime(prime_to_find):
    n = 1
    primes = []
    if prime_to_find < 1:
        print "Please enter a number greater than zero."
        return None
    else:
        while len(primes) < prime_to_find:
            if len(primes) == 0:
                primes.append(2)
                print "%i is prime number #%i" % (primes[0], len(primes))
            else:
                root = math.sqrt(n)
                for prime in primes:
                    if n%prime == 0:
                        break                
                    elif prime > root:
                        primes.append(n)
                        print "%i is prime number #%i" % (n, len(primes))
                        break
            n = n + 2
        return primes[prime_to_find - 1]