.bashrc

export PROMPT_DIRTRIM=2
if [[ ! $PROMPT_COMMAND =~ __bundler_prompt_command ]]; then
  export PROMPT_COMMAND="${PROMPT_COMMAND:-:} ; __bundler_prompt_command"
fi

# Put your fun stuff here.
PS1='\[\033[01;31m\]$(__bundler_ps1)\[\033[00;34m\]\[\033[32m\]\u@\h\[\033[34m\] \w\[\033[01;32m\]$(__git_ps1) \[\033[34m\]\$\[\033[00m\] '

bundle_setup

#!/bin/sh

BUNDLE_BASE=~/ruby/bundle-paths/rails3

if [ -f .bundle/config ]; then
  echo "Bundle config file already exists"
  bundle install
else
  projname=$(basename $(pwd))
  BUNDLE_PATH="$BUNDLE_BASE/lib"
  BINSTUBS=".bundle/bin"

  echo "Setting up bundle for $projname"
  bundle install --path=$BUNDLE_PATH --binstubs=$BINSTUBS
fi

bundler_ps1.sh

export bundle_dir=""
export bundle_bin=""
export orig_path=$PATH

function find_bundle_dir() {
  bundle_dir=$(pwd)
  while [ "$bundle_dir" != "/" ]; do
    if [ -e "$bundle_dir/.bundle/config" ]; then
      return 0
    fi
    bundle_dir=$(dirname "$bundle_dir")
  done
  bundle_dir=""
  export bundle_dir

  return 1
}

function bundle_config_changed() {
  local old_dir=$bundle_dir

  find_bundle_dir

  if [ "$bundle_dir" != "$old_dir" ]; then
    return 0
  else
    return 1
  fi
}


function __bundler_prompt_command(){
  if bundle_config_changed; then
    if [ ! -z "$bundle_bin" ]; then
      export PATH=$(echo $PATH | sed "s!${bundle_bin}\:!!")
    fi
    if [ -e "$bundle_dir/.bundle/config" ]; then
      export bundle_bin=$(readlink -f $(cat "$bundle_dir/.bundle/config" | grep BUNDLE_BIN | awk '{ print $2 }'))
    else
      export bundle_bin=""
    fi
  fi

  if echo $PATH | grep -q -v "$bundle_bin";  then
    export PATH=$bundle_bin:$PATH
  fi
}

function __bundler_ps1(){
  if [ ! -z "$bundle_bin" ]; then
    if echo $PATH | grep -q "$bundle_bin"; then
      echo -n 'B '
    fi
  fi
}

Upshot here is: use bundle_setup (put in your PATH somewhere) in a new project with a Gemfile. It'll create binstubs for all the gems it installs.

The __bundler_prompt_command checks for a .bundle directory and uses it to modify your PATH so that those binstubs are available.

The PS1 (apart from naming the current git branch) adds a 'B' to the prompt when this setup is active, so you can be sure that things are running properly.

Upshot is that each project gets a gemset, reused gems are shared across projects (although it may be that that slows gem loading ... easy enough to change that behavior), and we're not adding another tool to the chain (i.e. rbenv/rvm)