Tom,

> Is anyone else struggling with Ruby on Debian unstable (or as I like
> to call it, Red Hat Stable :))? 

As per RubyGems, I think you are misuderstanding some usage.  I have
active_record install ONLY via gems:
  % ruby -e "require 'active_record'; puts true"            
  -e:1:in `require': No such file to load -- active_record (LoadError)
        from -e:1
BUT: 
  % ruby -r rubygems -e "require 'active_record'; puts true"
  true

Basically, just put a "require 'rubygems'" in your code.  There are
other ways to handle this.
See the rubygem docs  
  http://docs.rubygems.org/read/chapter/3#page70

> It seems to me that Debians Package
> management is fighting with Gems, but I don't know enough about Ruby
> to know for sure, or what the correct way of doing things is.

I wouldn't use both apt-get and rubygems to install the same packages.
 It's easy to not use the rubygem ones by skipping the rubygems
require, but I'm not sure how well the debian ruby libs are packaged. 
There has been some .. controversy .. about this.

Cameron