I have a Git repository (originally CVS, then SVN, now Git) containing a Rails project that has been deployed on Linux for a while now. Everything seems to run fine.
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If it is ok for you to rewrite your repository's history (see problems with rewriting history) you could use git filter-branch to convert CRLF to LF:
git filter-branch --tree-filter 'find . -path './.git' -prune -o -type f -exec dos2unix \{} \;' HEAD
Note that if you have binary files in your repository you will have to refine the find command to exclude them.