gistfile1.txt

;;;
;;; Shell - '*shell*' will be renamed '*shell ($PWD)*'
;;;
(defun my-rename-buffer-with-pwd ()
  (let ((cur-buffername (buffer-name))
	(new-buffername (concat "*shell (" (pwd) ")*")))
    (unless (equal cur-buffername new-buffername)
      (rename-buffer new-buffername t))))

(defadvice comint-send-input (after rename-if-cd)
  (if (eq major-mode 'shell-mode)
      (my-rename-buffer-with-pwd)))
(ad-activate 'comint-send-input)

(add-hook 'shell-mode-hook
	  '(lambda ()
	     (my-rename-buffer-with-pwd)))