Here are the simple steps to be followed while upgrading rails version to use.

# Install rails version
1. gem install rails -v
== gem install rails 2.3.3

# Upgrade environment.rb for new version
2. RAILS_GEM_VERSION = '' unless defined? RAILS_GEM_VERSION
== RAILS_GEM_VERSION = '2.3.3' unless defined? RAILS_GEM_VERSION

# Upgrade necessary files for the new version
3. rake rails:upadte

# Start server
4. /script/server


Thats, it !