infrastructure for small RoR development firm

I would like to hear some opinions about the ideal infrastructure for a small RoR development group. on short term there will be about 5 running in production and there will always be active development on multiple projects.

should i work with a separate development/test server and a production server both accessible via the web? should i install svn / trac on the development machine? is it smart to use a separate database server?

I would love to learn more about the tools /infrastructures used by other RoR teams

Your production environment (web, app, db) should be completely separate from everything else. Isolate it.

You should have a distinct development environment. Putting SVN/Trac here is fine if the box can handle it.

Absoutely have a separate database server.

Keeping things separated helps prevent those little "all i did was make this one little change to a gem/db-config/etc" and have your production sites crash.