You should really ask this question in the StlRuby group on Google
Groups, to get better feedback from more Ruby folks.

Rails does not generally perform as well as PHP, but it is usually a
lot quicker to write a large Rails app than a PHP app. For Rails
deployment, you'll want to go with one of the Rails-specific hosts
(EngineYard, SliceHost, RailsMachine, Site5), or use a dedicated or
virtual machine. They're usually more expensive, but provide good
support, and you don't have to worry about the shared hosting security
issues. SliceHost is local, but I've heard recommendations from many
Rails developers.

If you go with PHP, be sure to use an MVC framework. That'll get you
about half way to Rails.

Where I have a choice, I usually go with Rails. When faced with
existing crappy PHP code, I try forcing some of my own PHP framework
in, to preserve my sanity.

Craig