First of all, it would perhaps make more sense to compare Rails to
Symfony, CodeIgniter or CakePHP, since Ruby on Rails is a complete web application
framework. Compared to PHP or PHP frameworks, Rails applications offer
the advantages that they are small, clean, and readable. PHP is perfect
for small, personal pages (originally it stood for "Personal Home Page"),
while Rails is a full MVC framwork which can be used to build large
sites.
Ruby on Rails has not a larger scalability issue than comparable PHP frameworks.
Both Rails and PHP will scale well if you have only a moderate number
of users (10,000-100,000) which operate on a similar number of objects.
For a few thousand users a classic monolithic architecture will
be sufficient. With a bit of M&M (Memcached and MySQL) you can also
handle millions of objects. The M&M architecture uses a MySQL server to
handle writes and Memcached to handle high read loads. The traditional
storage pattern, a single SQL server using normalized relational tables
(or at best a SQL Master/Multiple Read Slave setup), no longer works
for very large sites.
If you have billions of users like Google, Twitter and Facebook, then
probably a distributed architecture will be better. If you really want to
scale your application without limit, use some kind of cheap commodity hardware
as a foundation, divide your application into a set of services, keep
each component or service scalable itself (design every component as
a scalable service), and adapt the architecture to your application.
Then you will need suitable scalable datastores like NoSQL databases
and distributed hash tables (DHTs), you will need sophisticated map-reduce
algorithms to work with them, you will have to deal with SOA, external
services, and messaging. Neither PHP nor Rails offer a magic bullet here.