I've built all sorts of apps in Ruby. I use TextMate and vim to edit Ruby code (no proper IDE).
I've built web applications of various types including backend business process apps, an ecommerce music site, a student information system, complex user registration process for a medical company, a customer relationship management system, video editing and indexing for a content aggregator, and loads more.
I've also built a lot of backend stuff and non-web applications. I have worked on VOIP in Ruby using Adhearsion (which I contributed to for the 0.8 release). That's a killer framework and very much worth checking out.
It's hard to pick a favorite, but some of my favorite Ruby work happened early in my Ruby career because the language was still so new to me that I was in the "honeymoon" stage with it. Ruby has continued to be good to me since I started using it nearly a decade ago. I'll be sad to leave it when the time comes