eXtreme Programming and Ruby on Rails is a wonderful fit. Besides the most excellent support for test-driven development, XP works a whole lot better when your code base is so small that breakthroughs in knowledge about the domain can be executed in as few refactorings as possible.
But if you want to get into XP, you naturally also have to get into the planning game. And that’s where the newly released eXPlain Project Management Tool by John Wilger (with help from Jim Weirich and Quentin Baker) comes in. Through a simple interface, you can manage stories, iterations, and milestones.
Wilger and friends even had the good sense to put up a demo application (admin/adminadmin) for you to try out.