I've used it a little; I've not done anything much in it but I've had a good play with it.
Ruby as a language is pretty fun, it's about on par with Python for pleasure to code. It's touted as some all singing, all dancing replacement for perl but the interpreter is really slow and the language has naff all support for unicode.
The rails framework is the main web development framework and it's a pretty solid implementation of
MVC. RoR is pretty much what started the craze of all web development frameworks using MVC (not that that's necessarily a bad thing).
The RoR community is just over-bearingly smug and they tout that RoR is super scalable (as of when I tinkered with it, RoR didn't actually have any features to help it scale). The main advantage of the language/framework is that you can fling websites together super-quick once you've got your shit together, and as such it is very popular with more-or-less-doomed web startups. If you can find a job doing RoR you'll probably get a fair bit more money than PHP or ASP, but good luck finding the damned things.
Cal Henderson (one of my programming heroes, he made
b3ta and is an engineer at
flickr) comments a lot on ruby on rails in his presentation last year about
django -
'Why I hate django'. I seriously wanna try django at some point because Python is so much fun.