just ran gem update on a light use server machine that hadn\'t been updated in a while... and am getting loads of \'unable to convert \"\\x??\" to UTF-8 in conv
I have had a similar issue on my Mac OS X using iTerm2 instead of the default OS X Terminal.app.
The LC_CTYPE is not set properly by iTerm2, once I have added export LC_CTYPE="utf-8" to ~/.bash_profile the gem installation goes smoothly.
note: of course you can add the export to any of the other profile files