If you haven't already, you might check the config/database.yml file and make sure the username and password fields are correct.
the thing is its not a database its just a simple hello world app
By default rails will tend to assume you do have a database. The error
you're getting is because rails is trying to setup its database
connection as part of setting up the query cache that surrounds each
action (this is new in 2.0). The easiest way out of here is to make
sure you've created the databases the app is looking for and given
your app access to them.
Fred
