I noticed that you’ve got rails vendored. Even though you list the gems on your system, I can’t know for sure what version of ruby you’re running on since its running on the vendored version. Either tell us what all you’ve got vendored or just un-vendor rails and run it off your system.
I personally recommend migrating to using bundler. You can use this guide to set it up for a rails 2.3 app (if it is 2.3.x):
Either way, it looks like you’ve got an old version of rails interacting w/a very new version or rubygems. Not sure though. Let us know what’s in vendor/