Most of your question have already been answered better than I could so 
I will just give answers for the ones where I have anything to add.

GK. Sezhian wrote:

> 1.Has anyone of you tried rubyonrails web app in your
> protyping/production ? 

I have tried RubyOnRails and I am quite happy with it. There's lots of 
more users doing this and both the RubyOnRails mailing list and the IRC 
channel are experiencing steadily increases of activity.

> 3.OO becomes a overhead in some cases
>   when a small coding stuff  can achieve that .

It is not like that in Ruby. Ruby isn't Java and doesn't *force* you to 
use classes where a simple function would do.

While Ruby lets you do things in a procedural manner it still is a 
heavily OOP language under the hood. For example the following is a 
valid Ruby program and I'm not defining any classes there:

   5.times { puts "Hello World!" }
   puts Time.now.utc

   puts "Please enter something:"
   user_input = STDIN.gets.chomp
   puts "In reverse: #{user_input.reverse}"

   puts 2 ** 16

And so on. Everything you see there is still a method call, but you can 
ignore that aspect.

> 4.I have just gone thro some perfomance results which rendered Ruby to
> be very slow is it ?

Ruby is not as fast as it would like to be in all areas. There's quite a 
few implementations of faster and optimized interpreters going on (Just 
like in the Python world) and one of those projects is planned to be 
merged back into Ruby itself before the end of this year.

In other areas like web development Ruby and its frameworks already seem 
to be well enough to compete with Java.

In any case, it is usually easy to rewrite slow parts of Ruby in C. 
(Ruby's C interface is easier to use than that of other languages.)

For the RubyOnRails guys there's also the important point of scaling 
well -- if you add another server will the performance effect be close 
to doubling? With Rails this is the case.

> 5.Does Ruby have strong user groups in term of count like python?

This mailing list is one of them, but you're likely also interested in 
the Rails one.

Have a look at

http://weblog.rubyonrails.com/archives/2005/03/26/the-rise-of-interest-documented-by-the-ml/

> 6.Can I get some reference where ruby has Been used in large /criical
> projects?

The wiki page on RubyGarden others mentioned already has quite a few of 
those, but here's more Rails-based use cases:

http://wiki.rubyonrails.com/rails/show/RealWorldUsage
http://wiki.rubyonrails.com/rails/show/OpenSourceProjects

> 7.How is Ruby's performance with huge DB resultsets..

I don't think there is a bottleneck there, but you probably ought to re 
ask this question on the Rails mailing list as well.

Rails is not the only web development framework, of course, so you might 
also want to look into the performance of the other choices available.