I also had the same issue with Dreamhost / Passenger / Rails. I sent a support request and received the following response. My sites are also up and running.
Thank you for contacting technical support. I apologize for the problems with this. Recently, the servers have been upgraded to Debian, as well as some updates regarding your installation. I went ahead and fixed the sites with errors, as some stones needed to be reinstalled.
I apologize for the problems with this. Please let me know if there is anything else that I can do for you and have a nice day.
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