Dreamhost: two different Ruby versions and gemsets? - ruby-on-rails-3

Question

I am using dreamhost shared server. I get this error message, I do not understand what these error means. Does this shows passenger uses dreamhost default ruby 1.8 instead of my local 1.9.3? These error messages shows passesnger is using usr/lib/ instead of my home folders. Thanks in advance.
In config/environmnet.rb:
# Load the rails application
require File.expand_path('../application', __FILE__)
# Initialize the rails application
RailsMichaelcunnaneCom::Application.initialize!
.
0 /usr/lib/ruby/gems/1.8/gems/bundler-1.0.7/lib/bundler/setup.rb 10 in `exit'
1 /usr/lib/ruby/gems/1.8/gems/bundler-1.0.7/lib/bundler/setup.rb 10
2 /usr/lib/ruby/1.8/rubygems/custom_require.rb 36 in `gem_original_require'
3 /usr/lib/ruby/1.8/rubygems/custom_require.rb 36 in `require'
4 /home/miccun2/rails.michaelcunnane.com/config/boot.rb 6
5 /usr/lib/ruby/1.8/rubygems/custom_require.rb 31 in `gem_original_require'
6 /usr/lib/ruby/1.8/rubygems/custom_require.rb 31 in `require'
7 /home/miccun2/rails.michaelcunnane.com/config/application.rb 1
8 /usr/lib/ruby/1.8/rubygems/custom_require.rb 31 in `gem_original_require'
9 /usr/lib/ruby/1.8/rubygems/custom_require.rb 31 in `require'
10 /home/miccun2/rails.michaelcunnane.com/config/environment.rb 2
11 /usr/lib/ruby/1.8/rubygems/custom_require.rb 31 in `gem_original_require'
12 /usr/lib/ruby/1.8/rubygems/custom_require.rb 31 in `require'
13 config.ru 3
14 /usr/lib/ruby/gems/1.8/gems/rack-1.2.1/lib/rack/builder.rb 46 in `instance_eval'
15 /usr/lib/ruby/gems/1.8/gems/rack-1.2.1/lib/rack/builder.rb 46 in `initialize'
16 config.ru 1 in `new'
17 config.ru 1
Ruby version:
miccun2#oslo:~/rails.michaelcunnane.com$ ruby -v
ruby 1.9.3p194 (2012-04-20 revision 35410) [x86_64-linux]
miccun2#oslo:~/rails.michaelcunnane.com$ which ruby
/home/miccun2/.rvm/rubies/ruby-1.9.3-p194/bin/ruby
Rails version & up and running
miccun2#oslo:~/rails.michaelcunnane.com$ rails -v
Rails 3.2.3
miccun2#oslo:~/rails.michaelcunnane.com$ which rails
/home/miccun2/.rvm/gems/ruby-1.9.3-p194/bin/rails
miccun2#oslo:~/rails.michaelcunnane.com$ rails console
Loading development environment (Rails 3.2.3)
1.9.3p194 :001 > exit
RVM version and gemset selection
miccun2#oslo:~/rails.michaelcunnane.com$ rvm gemset list
gemsets for ruby-1.9.3-p194 (found in /home/miccun2/.rvm/gems/ruby-1.9.3-p194)
global
rails_michaelcunnane_com
miccun2#oslo:~/rails.michaelcunnane.com$ rvm gemset use rails_michaelcunnane_com --default
Using ruby-1.9.3-p194 with gemset rails_michaelcunnane_com
Bundle Show after Bundle installation
miccun2#oslo:~/rails.michaelcunnane.com$ bundle show
Gems included by the bundle:
* actionmailer (3.2.3)
* actionpack (3.2.3)
* activemodel (3.2.3)
* activerecord (3.2.3)
* activeresource (3.2.3)
* activesupport (3.2.3)
* arel (3.0.2)
* builder (3.0.0)
* bundler (1.1.3)
* coffee-rails (3.2.2)
* coffee-script (2.2.0)
* coffee-script-source (1.3.1)
* erubis (2.7.0)
* execjs (1.3.2)
* hike (1.2.1)
* i18n (0.6.0)
* journey (1.0.3)
* jquery-rails (2.0.2)
* json (1.7.1)
* mail (2.4.4)
* mime-types (1.18)
* multi_json (1.3.4)
* polyglot (0.3.3)
* rack (1.4.1)
* rack-cache (1.2)
* rack-ssl (1.3.2)
* rack-test (0.6.1)
* rails (3.2.3)
* railties (3.2.3)
* rake (0.9.2.2)
* rdoc (3.12)
* sass (3.1.17)
* sass-rails (3.2.5)
* sprockets (2.1.3)
* sqlite3 (1.3.6)
* thor (0.14.6)
* tilt (1.3.3)
* treetop (1.4.10)
* tzinfo (0.3.33)
* uglifier (1.2.4)
miccun2#oslo:~/rails.michaelcunnane.com$
.

Answer 1

Last time I deployed a Rails 3 application Dreamhost didn't offer 1.9.2. So my app used default 1.8.7. I think they still don't offer 1.9.2.
I didn't use RVM, I wanted that at first but I think it is too much of a hassle. Dreamhost Wiki has information but it was unsupported. So no help from Dreamhost if things go wrong. No help also when using your own 1.9.2.
On my laptop I use RVM of course but on Dreamhost PS just Dreamhost Ruby 1.8.7. The only thing I needed to change to get my Passenger Rails 3 app working was .gemrc in home directory which only has
gemhome: /home/myuser/.gems/
gempath:
- /home/myuser/.gems/