I’ve been using RadRails for a few months now and really enjoy its ease of use. It’s based on Eclipse and provides most of the features you need for building Rails applications. RadRails makes it simple to create new Rails projects, models, controllers, and views. The most useful thing I’ve found is the support for code hints (see the image below). Since I’m new to the Ruby programming language, code hints make my life much easier.

I was turned on to Eclipse when I started working at SensorLogic. It’s one of the greatest FREE tools available when it comes to Java and Flex development. We do a ton of Flex development at work so I’ve been working pretty extensively with Flex Builder, which is a plugin for Eclipse.
With all this being said my favorite IDE for building web applications is Dreamweaver. I’ve read that it can be configured to provide Rails code hints, yet the support is limited and there’s a fairly extensive procedure to get it configured. I’ll wait around until there’s better support and in the interim I’ll be diggin’ RadRails.