Rubygems 1.3.5 thinks it's 1.3.1

I upgraded to Rails to 2.3.4, and now some things aren't working in a
freshly created Rails project. For example:

$ script/plugin -l
Rails requires RubyGems >= 1.3.2 (you have 1.3.1). Please `gem update
--system` and try again.

So I'm trying to update rubygems (in a user directory; I don't have
sudo access). But the gem binary I download from RubyForge thinks that
it's version 1.3.1:

$ wget
$ tar vxzf rubygems-1.3.5.tgz
$ cd rubygems-1.3.5/
$ ./bin/gem --version

Has anyone seen this before?

That is because you have more than one Ruby installation and when you
installed your RubyGems 1.3.5 it was not installed in the global Ruby
install and rather your local install.

Try running a few which gem and which ruby commands to hunt down the
issue. You might also have to look at your path to figure this out.

Just as an example on one of my servers I have the normal /usr/local/
bin/ruby install but I also have /opt/ruby-enterprise/bin/ruby which
is what I use and I have to make sure this is in the front of my path
or else I might install a gem under the wrong directory...

This does the trick:
export PATH=/opt/ruby-enterprise/bin:$PATH