After installing rvm, updating .gmrc file, updating rubygems and running gem install rails -v \">=3.1.0rc\", I now seem to have a complete mess:
gem install rails -v \">=3.1.0rc\"
I had pretty much the same message when trying to generate a controller after installing IntelliJ IDEA and the associated Plugin for Rail Dev. From my app directory I just executed bundle install and was then able to generate controllers again.