It's in the executable environments. However, I find working from the terminal with bash to be easier then mucking with xCode environment variables. Since, your effectively only using XCode as an IDE now.
Use the executable inspector to add the command-line arguments. Select your executable file from the Groups and Files list and click the Info button in the project window toolbar. Doing this opens the executable's inspector. Click the Arguments tab in the inspector. From there you can add your command-line arguments.