Ruby is an extremely nice object oriented language, with a beautiful syntax and the great "rails" framework built upon it.
It's talked about a lot, people "play" with it in their spare time (because it is so elegant), and it's the "language of the moment".
But it is not gaining popularity very fast. How many large scale "well known" sites are actively using it (not including 37signals and affiliates)? Why would such a great language like this not take the development world by storm?
I'll tell you why, because the underlying components are an absolute nightmare, here is an illustration taken from "The Matrix" to show you what I mean:
Ruby and ruby on rails do not play nice with "common" server setups.
It is a pain to install RoR properly. People seem to skip around this issue, but it is a huge one. You're fighting with fastcgi, mongrel, webbrick, mod_ruby, lighthttpd, and whatever the flavour of the month method of actually getting data from your ruby application to the screen is.
There are no standard install methods, everyone has their own ideas about how it should be setup... All ruby (and RoR) needs is a -simple- method of installation that handles itself and doesn't require constant looking after, as well as a standardised way of interfacing with one of the most widely used webservers in the world (apache) without needing hack-y workarounds. Until this happens I can guarantee you it will not be breaking any major ground as an up coming language. It will simply remain a language used only by "boutique" specialist companies and people experimenting.
In all honesty, building a real world production application with an existing framework is going to be no faster using RoR than it is using something like PHP or C#, etc.