What are you using on your workstation? If you are using Ubuntu on your desktop, I would deploy Ubuntu on the server also. This allows you to combine your desktop and testing machines into one. Then, you only need a dedicated staging (virtual) machine and the production machine.

Otherwise, I also recommend CentOS, especially if your hosting provider lets you run it with SELinux enabled.

CentOS is a very common distro for rails production environments. Several high profile hosting cos use it, like RailsMachine for example. Hard to go wrong with CentOS.