Ruby-debug still doesn’t support ruby 1.9 and I doubt it will ever be. Instead we have ruby-debug19 gem now. So if you are using ruby 1.9 and you need to debug your rails apps, install it.
sudo gem install ruby-debug19
Currently Rails 3 beta 1 complains that it can’t find ruby-debug gem when you run the server with debugging enabled. Just add ruby-debug19 gem to your Gemfile and it’ll work.
gem "ruby-debug19"
[...] Ruby-debug19 is now available for Ruby [...]