And another bit:

b[i][e]=(n==2?b[i][e]:n==3?o:f

becomes:

n!=2?b[i][e]=n==3?o:f:f


----

The z array can be reduced further

q=(m=[-1,0,1])-[0];(m*2+q).sort.zip(m+q+m).map{

becomes:

m=[-1,0,1]*3;(m.sort.zip(m)-[[0,0]]).map{

----

Then, the calculation of n can be improved by using separate variables:

n=((m.sort.zip(m)-[[0,0]]).map{|x|(c[i+x[0]]||[])[e+x[1]]}-[f,u]).size

becomes:

n=((m.sort.zip(m)-[[0,0]]).map{|z,x|(c[i+z]||[])[e+x]}-[f,u]).size

and then, turn it into a select statement:

n=(m.sort.zip(m)-[[0,0]]).select{|x,z|o==(c[i+x]||[])[e+z]}.size


----

This leaves:

$><<"\e[2J";s,o,f,c,u=20,"#"," ";b,m=(z=0..s).map{z.map{(rand<0.3)?o:f
}},[-1,0,1]*3;until c==b;c=b.map{|z|z.dup};$><<"\e[H"<<b.map{|x|x*f}*"
";s.times{|i|s.times{|e|n=(m.sort.zip(m)-[[0,0]]).select{|x,z|o==(c[i+
x]||[])[e+z]}.size;n!=2?b[i][e]=n==3?o:f:f}};sleep 0.2;end

272 Characters. I think I'll quit now.


> I also rejuggled things to move that "\n" so that it made use 
> of the end of the line, and There was a reference to " ", 
> which I replaced with f. I might have done some other things 
> too, but I don't have much of a memory.
> 
> $><<"\e[2J";s,o,f,c,u=20,"#"," 
> ";b,q=(z=0..s).map{z.map{(rand<0.3)?o:f}},
> (m=[-1,0,1])-[0];until 
> c==b;c=b.map{|z|z.dup};$><<"\e[H"<<b.map{|x|x*f}*"
> ";s.times{|i|s.times{|e|n=((m*2+q).sort.zip(m+q+m).map{|x|(c[i
> +x[0]]||[
> ])[e+x[1]]}-[f,u]).size;b[i][e]=(n==2?b[i][e]:n==3?o:f)}};slee
> p 0.2;end
> 
> That's 292 characters.
> 
> 
>