Hi Hassan,
Thanks for using VirtualRails 
you’re right, there was a mistake in our documentation, now the Rails version mentioned vor virtualrails 1.1 will be everywhere 2.3.4, and we will soon release a new version with rails 2.3.5 rails.
with the actual 1.1 version, you can open a terminal and run the following command :
sudo gem install rails --version 2.3.5
it works just fine, and you will have the followinf output :
virtualrails@jay ~ $ sudo gem install rails –version 2.3.5
[sudo] password for virtualrails:
Successfully installed activesupport-2.3.5
Successfully installed activerecord-2.3.5
Successfully installed actionpack-2.3.5
Successfully installed actionmailer-2.3.5
Successfully installed activeresource-2.3.5
Successfully installed rails-2.3.5
6 gems installed
Installing ri documentation for activesupport-2.3.5…
Installing ri documentation for activerecord-2.3.5…
Installing ri documentation for actionpack-2.3.5…
Installing ri documentation for actionmailer-2.3.5…
Installing ri documentation for activeresource-2.3.5…
Installing ri documentation for rails-2.3.5…
Installing RDoc documentation for activesupport-2.3.5…
Installing RDoc documentation for activerecord-2.3.5…
Installing RDoc documentation for actionpack-2.3.5…
Installing RDoc documentation for actionmailer-2.3.5…
Installing RDoc documentation for activeresource-2.3.5…
Installing RDoc documentation for rails-2.3.5…
hope it will help
please feel free to send me support questions if you have troubles using VirtualRails !
Jérôme Fillioux
VirtualRails Team