For http://serverfault.com/questions/405264/ ,having problem using try_files

nginx.conf

worker_processes  20;

events {
    worker_connections  1024;
}

http {
    include       mime.types;
    default_type  application/octet-stream;

    log_format  main  '$remote_addr - $remote_user [$time_local] "$request" '
                      '$status $body_bytes_sent "$http_referer" '
                      '"$http_user_agent" "$http_x_forwarded_for"';

    sendfile        on;
    tcp_nopush     on;

    keepalive_timeout  5 5;
    tcp_nodelay        on;

    gzip on;
    gzip_min_length  1100; #1100 20101203
    gzip_buffers     16 8k;
    gzip_comp_level 6;
    gzip_proxied any;
    gzip_types  text/plain text/css application/x-javascript text/xml application/xml application/xml+rss text/javascript;

    include /etc/nginx/conf/sites-enabled/site.conf;
}

site.conf

upstream SITE_NAME {
  server unix:PATH_TO_PROJECT/shared/pids/thin.0.sock;
}

# asset server
server {
  listen 80;
  server_name assets.example.com;
  expires max;
  add_header Cache-Control public;
  charset utf-8;
  root   PATH_TO_PROJECT/current/public;
}

# frontend
server {
  listen 80;
  server_name .example.com;
  charset utf-8;

  log_format custom_debug 'request:"$request" $status uri:"$uri"';
  access_log logs/example_com/access.log custom_debug;
  error_log logs/example_com/error.log debug;

  location ~* images/thumb {
    root PATH_TO_PROJECT/current/public;
    expires max;
    break;
  }
  location ~* ^.+.(jpg|jpeg|gif|png|swf|zip|rar|doc|xls|exe|pdf|ppt|txt|tar)$ {
    root PATH_TO_PROJECT/current/public;
    expires max;
    break;
  }

  gzip on;

  location / {
    # serve static cache files
    set $cache_dir_2 'home';
    if ($host = gas.example.com ) {
      set $cache_dir_2 'gas';
    }
    if ($host = api.example.com ) {
      set $cache_dir_2 'api';
    }

    root PATH_TO_PROJECT/current/public;

    # $uri always contains one slash(the first slash but not the last)
    try_files /cache/$cache_dir_2$uri/index.html /cache/$cache_dir_2$uri.html @rails;
  }

  location @rails {
    proxy_set_header  X-Real-IP  $remote_addr;
    proxy_set_header  X-Forwarded-For $proxy_add_x_forwarded_for;
    proxy_set_header Host $http_host;
    proxy_redirect off;

    proxy_pass http://SITE_NAME;
    break;
  }
}