The above circuit will work (mine does).
You don't need to enable/disable any internal clocks because all AVR's are configured to their internal 1Mhz clock source by default (factory set).
Ponyprog will work immediately with any fresh AVR without setting any fuse bits.
DON'T play aroud with the fuse bits unless you know what you're doing, otherwise you will never be able again to flash your AVR!
That's true for new series with 8MHz internal oscillator and DIV8 programmed.
Not for old AT90S1200. You can order AT90S1200A if you insist for RC internal oscillator enabled into factory.
Excerpt from datasheet http://www.atmel.com/dyn/resources/prod_documents/DOC0838.PDF page 4:
An On-chip RC Oscillator running at a fixed frequency of 1 MHz can be selected as the MCU clock source. If enabled, the AT90S1200 can operate with no external components.
A control bit (RCEN) in the Flash Memory selects the On-chip RC Oscillator as
the clock source when programmed (“0”). The AT90S1200 is normally shipped with this bit unprogrammed (“1”). Parts with this bit programmed can be ordered as AT90S1200A. The RCEN-bit can be changed by parallel programming only. When using the On-chip RC Oscillator for Serial Program downloading, the RCEN bit must be programmed in Parallel Programming mode first.