config.rb

# Optional more complicated strat for the database.yml
require 'ftools'
namespace :config do
  task :build do
    File.mkdir_p temp_config_dir
    # this is the place to hook after when creating a config file
  end

  task :update do
    # upload contents of temp_config_dir to #{release_path}/config
  end

  before 'config:update', 'config:build'
  after 'deploy:update_code', 'config:update'
end

task :some_config do
  # write file1 to temp_config_dir
end
task :some_other_config do
 # write file2 to temp_config_dir
end
after 'config:build', 'some_config'
after 'config:build', 'some_other_config'

# both file1 and file2 will automatically get uploaded to #{release_path}/config/[file1, file2]

deploy.rake

task deploy do
  users = {:user_1 => db_pass_1, :user_2 => db_pass_2, :user_n => db_pass_n }
  users.each do |user, pass|
    system("cap deploy:update -S user=#{user} -S pass=#{pass}") or abort("Could not deploy to #{user}")
  end
end

deploy.rb

def validate_credentials
  fail("Cannot deploy without giving user credentials") unless variables[:user] && variables[:password]
end

validate_credentials

set :user, variables[:user]
set :password, variables[:password]

logger.info("Deploying to #{user}")

set deploy_to: "/home/#{user}/apps/#{application}"

set :app, "#{user}.my_domain.com"
set :web, "#{user}.my_domain.com"
set :db, "#{user}.my_domain.com"

# and configure it to write out the database.yml
# some other options:
# * manually put the database.yml in the #{shared_path}/config/database.yml and just symlink
#   This has the big benefit of only keeping the credentials on the server itself and not having
#   to manage them outside of that (Assuming they're relatively static, I would do that)
# * automatically put the creds in #{shared_path}/config/database.yml and symlink it in
namespace :db do
  task :update_config, :roles => :app, :except => { :no_release => true } do
    yaml = <<EOF
production:
  adapter: mysql
  encoding: utf8
  database: #{user}_app_production
  username: #{user}
  password: #{pass}
EOF

    # now get that file into #{release_path}/config/database.yml
    # leave that up to you
    # I'd probably write to a temp file and upload it (should make sure to delete it afterwards to
    # avoid leaving a credentials file in tmp)
    # or echo it directly into a file on that box (but I can never get multiline stuff to work
    # properly when doing a run("..."))
  end

  after 'deploy:update_code', 'db:update_config'
end