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Rails 3 comes with baked in support with bundler.

Using Bundler with Rails 3

Install Rails as you normally would. Use sudo if you would normally use sudo to install gems.
$ gem install rails
We recommend using rvm for dependable Ruby installations, especially if you are switching between different versions of Ruby
Generate a Rails app as usual
$ rails new myapp
$ cd myapp

Run the server. Bundler is transparently managing your dependencies!
$ rails server

Add new dependencies to your Gemfile as you need them.
gem "nokogiri"
gem "geokit"

If you want a dependency to be loaded only in a certain Rails environment, place it in a group named after that Rails environment
group :test do
  gem "rspec"
  gem "faker"
end

You can place a dependency in multiple groups at once as well
group :development, :test do
  gem "wirble"
  gem "ruby-debug"
end
Learn More: Groups
After adding a dependency, if it is not yet installed, install it
$ bundle install
This will update all dependencies in your Gemfile to the latest versions that do not conflict with other dependencies