The Rails Way

I'll second the votes for The Rails Way, it really is good. Another one to consider which I didn't see mentioned is an Apress book called "Practical Rails Social Networking Sites". It's slightly out of date, though anything written more than 6 months ago is. In spite of it's somewhat misleading title, it's a good introduction to building a site in Rails, and touches on most of the things you'd need to build any modern application. It serves as a good introduction to Rails IMO. One other really good resource is The Rails Guides: http://guides.rubyonrails.org - they cover everything, and are very up to date. I use them regularly.

I own almost every Rails book in one format or another (I run a top Ruby blog so I get them to review) and... it depends what you're trying to do. The Rails Way kicks ass once you already know Rails to a certain extent - it's definitely not a first book. It's a "bible" type book and is stuck somewhere back in Rails 2.1 land, I believe, but most of it still applies. AWDwR is reasonable and mostly up to date (focused at Rails 2.2, as far as I recall) and particularly suited for people who are totally new to Rails. My recommendation for people who are new to both Ruby and Rails is Foundation Rails 2 by Eldon Alameda as it has a 30 page primer to Ruby included and spends a long time "touring" Rails. It also covers RSpec which, given you're Agile, might be of significant interest to you. Books I'd steer away from either because they're out of date or just plain bad IMHO would be all of the Packt books and Beginning Rails from Apress (the latter, hopefully, will be brought up to date in a 2nd edition).