I know nothing about rails and never messed with it, so I don't know if this helps... but another host I use released this when they did a recent upgrade:
In reply to:
Please be aware that Typo versions prior to 4.0.0 are not compatible with
Rails 1.1.x and will break during this upgrade (unless you have frozen your
Rails gems into your vendor directory). Even if you have previously frozen
your gems, it is highly recommended that you take the time to upgrade to
Typo 4.0 and Rails 1.1.5 to ensure your site's security. Everyone running
Typo tha is not current trunk or stable version 4.0 must upgrade to ensure
their site's security in light of this rails security issue.
So, maybe there are certain things that break on the upgrade? If Ruby has a changelog available, it might be something you could read through and see if you need to change anything you're doing.
I don't know how many people are using it here, but if it's more than a handful, there should be more people jumping in on this thread if it's a system-wide problem.
Otherwise, I would guess that it's just certain scripts breaking.
Or I could be way off, which would be explained in the first sentence of this post. ;)