product_observer.rb

class ProductObserver < ActiveRecord::Observer
  observe :product

  def after_save(product)
    reload_routes
  end

  def after_destroy(product)
    reload_routes
  end

  def reload_routes
    ActionController::Routing::Routes.reload!
  end
end

routes.rb

ActionController::Routing::Routes.draw do |map|
  # Products
  map.products       '/products',         :controller => 'products', :action => 'index'
  
  # AB: the filter controls the tab navigation on the /products page
  map.product_filter '/products/:filter', :controller => 'products', :action => 'index', 
                                          :requirements => {:filter => %r[featured|enterprise|mobile|all]}

  # AB: Normally a bad idea (routes are not updated in prod mode)
  # I'm currently using an observer to update the routes when a new product is added.
  # This prevents routing errors when adding additional products or when changing slugs
  products = Product.enabled.collect{|product| product.slug }

  map.product      '/:id',          :controller => 'products', :action => 'show', 
                                    :requirements => {:id => %r[#{products.join("|")}]}
  map.product_page '/:id/:page_id', :controller => 'products', :action => 'show', 
                                    :requirements => {:id => %r[#{products.join("|")}]}
end

We have multiple base level <domain.com>/:something pointing to different controllers and this is one possible way to work around that need. Though this might not be the best solution - it seems to work okay. Keep in mind that this for Rails 2.3.5.