Just setup a Rails 3, Ruby 1.9.2 on a free ec2 micro instance (http://aws.amazon.com/free)
Started from the quick Basic 32-bit Amazon Linux AMI 2011.02.1 Beta AMI, I setup the following stack in less than 2 hours.
And my Rails 3 app.
The whole process is mostly smooth. All dependencies can be found on yum.
It looks like that the free (for a year) micro EC2 instance is quite a valid solution for personal ruby projects.