If you didn’t have the pleasure of experiencing the awesome memory leak rubygems 1.1 caused, consider yourself lucky. If you are on a modestly sized VPS, such as a slicehost 256 mb slice, I do not recommend running gem update --system to upgrade rubygems. It is almost sure to slow your server to a screeching halt. Here’s how you install it manually:
mkdir ~/sources
cd ~/sources
wget http://rubyforge.org/frs/download.php/38646/rubygems-1.2.0.tgz # you could use curl instead of wget, it just depends what is installed on your system
tar -zxvf rubygems-1.2.0.tgz
cd rubygems-1.2.0
sudo ruby setup.rb

And you’re good to go! No more memory leak.

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