Where to place rails projects on a linux server?

Develop or deploy?

On my home machine I have a main rails subdirectory under my home directory
where I do development.

On my home machine: Deployment via Apache is under the servers home
directory - /var/www/ on my machine.

If you are on a hosting service it depends on where they give you space.
On Dreamhost I have lots of directories above and beyond the one for each
domain and subdomain, but they all have to be under my home - that's the way
Dreamhost works.

If you have VPS then its as if you owned the machine ... but stick with
some scheme, don't dance around. I'd put deployed stuff under /var/www but
then I'm used to *NIX conventions.