Rails 3 on dreamhost

Since is seems strangely difficult to find a straight answer about getting Rails running on Dreamhost, here are the current versions of all the important programs:

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[prague]$ ruby -v
ruby 1.8.7 (2008-08-11 patchlevel 72) [x86_64-linux]
[prague]$ rails -v
Rails 3.0.3
[prague]$ gem -v
1.3.6
[prague]$ bundle -v
Bundler version 1.0.7
[prague]$ date
Sun Mar 20 19:04:34 PDT 2011