For development : mongrel, which is single threaded & lightweight
For deployment : Passenger running on apache (most web hosting providers provide this) or nginx web server.
If you are looking for scalability, I'd suggest Heroku or Rackspace cloud as scaling is done behind the scenes by them.
In Ruby, performance management is something that is generally best left to container. Unlike java, not much tweaking is possible, but loosely speaking, performance of the rails apps. have been satisfactory with medium-high traffic usage.
Evil is afoot. But this tiny ad is just an ad:
Building a Better World in your Backyard by Paul Wheaton and Shawn Klassen-Koop