Windows or Linux for RoR Develpment?

The main advantage of working in Linux, IMO, is that you have the
ability to drop down into C and do some low-level programming if you
find it necessary (generally for performance). Consequently, some
things just run faster on Linux than they ever will on a Win platform
(which, I believe, is still compiled using VC++ 6.0 and might be
slower than necessary at this point!).

I'd second @yaxm's recommendation of VMWare. If you have a reasonably
fast disk (7200+ RPM) you'll have good response from your VM and you
can go 'full screen' so it's almost like using it as your native
environment. You'll probably want to have 2GB of RAM for decent
performance. This is the route I've gone because I don't want to lose
all the stuff I've got on my Win laptop.

@Ryan: Why denigrate the desire for a GUI? People don't just give up
their development preferences just because you're using Rails. While
I use a GUI less and less, I sometimes find that it is significantly
quicker to get a quick visual scan of the db to diagnose some
problems.