script/server starts a webrick/lighty in development mode.
mongrel_rails start -e development also does this.
You could have a RAILS_ENV environment variable set (to ‘production’) which might be the reason this is happening. Easy to test, just tail log/development.log and log/production.log and see which scrolls by as you click on links in your app.
Also, some changes require a restart (config/environment.rb) etc.
(This is not Radrails specific)