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This is a list maintained by the official Ruby on Rails site:
http://wiki.rubyonrails.com/rails/pages/RailsWebHosts
It might not be up to date though because I'm pretty sure everyday a new hosting company starts to offer Rails to it's customers.
Ruby hosting is not necessarily expensive, you will find dirty cheap offers for shared hosting and dedicated hosting as well.
If you like having total control and have an adventurous spirit too, you can rent a VPS and install and customize Ruby and Rails all by yourself.
I would recommend any of these 2 for a VPS because I have personally tried them:
- www.slhost.net ( still have an account with them )
- www.futurehosting.biz
The reason why I would recommend a VPS for an all-by-yourself setup is because it's cheaper than a dedicated server and can offer comparable features.
Going for shared or managed hosting can be great because you spare yourself a lot of hassle getting the configuration right, tracking security releases, and so forth. Some managed hosts also provide clustered services which are a special boon if you're looking for high availability. One such company is http://en.railscluster.nl.
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