I got this error when i was deploying a rails 3 app in railsplayground. I was using http://wiki.railsplayground.com/railsplayground/show/How+To+use+Phusion+Passenger as a reference. The error was somewhat familiar, as application controller was renamed to application_controller in 2.2 or 2.3 (not very sure when). Then i came across this post, http://groups.google.com/group/phusion-passenger/browse_thread/thread/676a73280221c93f. Which pointed out, we should use RackBaseURI instead of RailsBaseURI. Yep, the solution is, use

RackBaseURI /

instead of RailsBaseURI /

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