Thanks Na Na, I was able to fix the issue by uninstalling the mysql gem 
and then installing ruby-mysql gem.

Na Na wrote:
> Using Mac OS X 10.6.4, the solutions above didn't work for me.  I 
> removed the gem, then tried:
> gem install ruby-mysql
> 
> instead of the various attempts to get "gem install mysql" to work.
> 
> At a glance, this appears to have worked, and my ruby on rails is able 
> to access database.

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