I suppose the OP has solved his problem by now. But I'd just like to share my tip for easily installing an up-to-date development environment for both Ruby and Rails. It's really simple: install and use MacPorts. If you aren't a Unix hacker or just like installing stuff painlessly, you will love MacPorts.
It's been a while since I did the installation. So forgive me if I miss some details. After installing MacPorts, installation of Ruby and Rails should be as easy as the following:
sudo port install ruby
sudo port install rb-rubygems
sudo gem install rails
That should be it! After that you may want to explore the many other applications and utilities that MacPort provides. For example you may want to use Sqlite3 for development:
sudo port install sqlite3
sudo gem install sqlite3-ruby
You can also install MySQL using MacPorts. However, in this case I opted to use the fine Mac-installer from the people behind MySQL. The main reason is that it also provides a handy preference panel for starting/stopping the server.
One last thing. When using MacPorts, remember that you need "/opt/local/bin:/opt/local/sbin" early in your PATH. This may be done for you when installing MacPorts. I can't quite remember. I plan to do a complete reinstall of OSX soon. This time I will write all the details down and make them available somewhere.