I recommend <a href="http://www.slicehost.com/">http://www.slicehost.com/</a> I was blown away by the simplicity and power of their service. All the benefits of your own box with far less hassle and only $20pm starting fee. Loads of really good documentation on getting a production RoR environment up and running too. They're probably the best bet for bootstrapers and students.
<a href="http://www.webair.com/">http://www.webair.com/</a> - I've got a few servers with them, great service and prices. I can get you custom prices that aren't listed on the site; for example I've got a quad xeon 3ghz with dual SCSI 120gb drives, 4gb ram and 10mbps unmetered for 249/month.
I'd definitely recommend <a href="http://rimuhosting.com">http://rimuhosting.com</a><p>I know of at least 1 YComb startup that has used it in the past - and we're using it now. I've personally been hosting with them for 2 or 3 years now and it's hands down the best virtual hosting I've used (compared with 4 others I've tried).<p>Other friends are using Amazon EC2+S3 for scaling needs (on the fly load-balancing). Haven't used it myself, but I only hear great things.
we use joyent.com - at least we try to... The portfolio is impressive, and we mainly chose them because they offer horizontally scalable rails solutions, something that many providers are still missing. <p>We requested the new server 2 weeks before. Still no server... <p>Do you know of alternatives we might be looking for?
I like Linode: <a href="http://www.linode.com">http://www.linode.com</a><p>They may be a little more expensive than other VPS hosts, but they make up for it with awesome, rapid service turnaround. I've been using them for three years, and I don't think I'd switch to anything except maybe EC2.
Geoff Brozny at <a href="http://www.glorb.com">http://www.glorb.com</a>
He is fantastic at customer support. Send him an email anytime and he will respond within an hour - usually, within a few minutes.
I'd recommend Railsmachine. I wrote a post about it here: <a href="http://blog.wakoopa.com/archives/how-we-got-hosted-the-rails-way">http://blog.wakoopa.com/archives/how-we-got-hosted-the-rails-way</a>