for the gem installation, don't use the --update flag, just do it manually

go to:
http://pierre.droids-corp.org/maemo/gems/

and download all your gems, then run:

gem install activesupport-1.4.1.gem --no-rdoc --no-ri && gem install activerecord-1.15.2.gem --no-rdoc --no-ri && gem install actionpack-1.13.2.gem --no-rdoc --no-ri && gem install actionmailer-1.3.2.gem --no-rdoc --no-ri && gem install actionwebservice-1.2.2.gem --no-rdoc --no-ri && gem install rake-0.7.1.gem --no-rdoc --no-ri && gem install rails-1.2.2.gem --no-rdoc --no-ri

^that all should be in one line, just copy paste to xterm or ssh and run it in the directory that you saved your gems to - basically it will install the gems just without the documentation (which you probably don't read anyways)

that's what i did to install ruby on rails and i got several apps working (namely, tracks)

EDIT: more tutorials:
http://www.digitalknk.com/2007/05/27...ur-nokia-n800/