Hello, thought I'd share my experience with rails on the mediatemple.com grid server. They offer a 64 MB mongrel container 1 TB of bandwith and 1,000 grid processing units for $20 a month. In theory I love it because they already have done all the load balancing work for you. The DB is on another machine, you have access too 100s of machines on "the grid" and just pay extra for going over 1,000 grid processing units... but... in practice they are still working out issues. They had a huge crash about a week ago, but even without that crash my ruby sites were often slow. You can just tell I wasn't getting enough CPU cycles... not enough machines on the grid? In any event I finally made the call that a P4 1 GIG RAM dedicated server from godaddy for $107 a month was the better deal.
And in setting up the server I discovered nginx. Nginx is great! A replacement for apache or lighttpd it communicates with X number of mongrel containers (5 is a good number to run) and is super fast. So, it's $20+ a month vs $107 a month but totally worth it. Nginx is so fast you can run lots of sites from the same box.
-andrewfromfly http://www.youtube.com/profile?user=andrewfromfly