The hosting issue still seems to be the big risk with using Rails for a startup -- hosting a Rails app seems to require a lot more sysadmin-like knowhow than some of the most established environments that have essentially become standard and one-size-fits-all features on most hosts.

Joyent seems to be one of the leaders in the game.. do any of you use them and have comments to share?

I'm using TextDrive/Joyent, and I'd like to believe Accelerators will solve some scaling issues. I haven't launched to really know yet though. The support has been excellent, and the resources available online are good.