I'm using Rails 3.1.rc4 with ruby 1.9.2, and I just made a new app to test 
this out.  I ran your exact commands, except I used the standard sqlite3 
development db.  I did not get any errors - the scaffold worked fine, and so 
does creating users.

Maybe it's an SQL development database issue - e.g. is your db properly 
created/configured and everything?

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