I came across this error today trying to run merb server.
For some reason my file permissions on my home directory are messed up.
To rectify this, the home directory itself needs its permissions set back to normal.

Simply run the following command on your home directory:
chmod 750 /Users/myhomedirectory

My user name is jasongreen so I ran:
chmod 750 /Users/jasongreen

Today I started messing around with Rails again, after having spent the best part of the last months on Merb.

Anyway the common link problem for the mysql adapter reared its ugly head as usual.
No such file or directory - /tmp/mysql.sock

The solution to this is to create a symbolic link from your mysqld.sock to /tmp/mysql.sock

But where is your mysqld.sock?

For Mac OSX it is usually in /opt/local/var/run/mysql5/mysqld.sock.
Check where it is with locate.

locate mysqld.sock

Now create the symlink:
ln -s /link/to/where/mysqld.sock /tmp/mysql.sock
on my Mac, I ran:
ln -s /opt/local/var/run/mysql5/mysqld.sock /tmp/mysql.sock