I do get success after doing the gem install, and the gem is listed in the local. I'm using cPanel on Site5.
For what it's worth, I'm seeing some redmine users have the same error with 1.1.0 on their discussion forums.
*** LOCAL GEMS ***
actionmailer (2.3.8, 2.3.5, 2.3.4, 2.3.3)
actionpack (2.3.8, 2.3.5, 2.3.4, 2.3.3)
activerecord (2.3.8, 2.3.5, 2.3.4, 2.3.3)
activeresource (2.3.8, 2.3.5, 2.3.4, 2.3.3)
activesupport (2.3.8, 2.3.5, 2.3.4, 2.3.3)
bundler (1.0.2)
capistrano (2.5.8)
cgi_multipart_eof_fix (2.5.0)
daemons (1.0.10)
fastthread (1.0.7)
fcgi (0.8.7)
ferret (0.11.6)
flvtool2 (1.0.6)
gem_plugin (0.2.3)
highline (1.5.1)
i18n (0.4.2)
id3lib-ruby (0.5.0)
mongrel (1.1.5)
mysql (2.8.1, 2.7)
net-scp (1.0.2)
net-sftp (2.0.2)
net-ssh (2.0.11)
net-ssh-gateway (1.0.1)
passenger (2.2.15, 2.2.11, 2.2.7, 2.2.4, 2.1.3)
rack (1.2.1, 1.1.0, 1.0.1, 1.0.0)
rails (2.3.8, 2.3.5, 2.3.4, 2.3.3)
rake (0.8.7, 0.8.3)
rmagick (2.13.1, 2.10.0)
rubygems-update (1.3.7, 1.3.5)
sqlite3-ruby (1.2.5)
tzinfo (0.3.13)
vim-ruby (2007.05.07)