Patrick Logan poses the reasonable question "Why would you use Ruby when you could use Smalltalk???" Looking at things from a development rather than a deployment perspective, I would have a difficult time arguing with Patrick. Squeak provides a good open source platform, many libraries and third party projects, easy headless deployment of Seaside web applications, etc. Commercial Cincom VisualWorks adds the ability to create small executables, great web services libraries, good support for commercial licensing, etc.
Ruby on the other hand also has a lot going for it: many instant install gem libraries, easy installation of Ruby itself, Rails is a nice web app framework, and the best of all: Ruby is already installed on most servers (and is easy to install otherwise) and deployment of Ruby applications and utility scripts is simple. Also JRuby is a very interesting technology for those of us who need to work in "Java land".
One other big win, Ruby-wise, for me is that (like Python) is such a readable and concise language: meaningful algorithms/programs are often just one or two pages of code - great for digesting other peoples code or when you need to look at old work.