Welcome Aboard

In response to a recent inquiry on the cygwin list, I now have Ruby on Rails working out of the box on Cygwin, and have just uploaded the necessary packages to the Ports repository. To assure proper operation, the newly updated Ruby 1.9.3-p385-2 release is required.
To get aboard with Rails, install the ruby-rails package and its dependencies, then:

$ rails new testapp1 --skip-bundle
(files are installed)
$ cd testapp1
$ bundle install --local
(this will show that existing gems are being used)
$ rails server

(then point browser to http://localhost:3000/,
OR:)
$ unicorn_rails
(then point browser to http://localhost:8080/)

From there on out, you're on your own. Enjoy the ride!
UPDATE: Well, that didn't take long. A security advisory was issued yesterday for Rails, so I have updated the Rails packages to 3.2.12 accordingly. The supported method for updating Rails apps for newer Rails versions is as follows:

1. Open Gemfile in a text editor and update the version number following the gem 'rails' directive.
2. Run bundle update --local to update the Gemfile.lock file. Existing gems should be found and used.
3. Run rake rails:update to update configuration files, using the 'd' option to verify changes first.

More details on this procedure are available on RailsApps.