If you ever run into this pain in the butt error, hopefully this’ll save you some time:

Installing a gem without the version works fine; installing a gem using “-v 2.x.x” or whatever version you like ends in:
spec_fetcher.rb:254: warning: getc is obsolete; use STDIN.getc instead

Guess what? RubyGems 1.3.7 doesn’t play nice with OSX 10.5.8. So downgrade to 1.3.6, or if you’re using RVM, do this:
echo 'rubygems_version=1.3.6' >> ~/.rvm/config/user ; rvm remove 1.8.7 ; rvm install 1.8.7
(assuming you are using 1.8.7 in your RVM, otherwise, use 1.9.1 or whatever)
Voila, works like a charm.

EDIT 7/7/2011: According to Mike Shaheen, the new way to do this is simply:  rvm rubygems 1.3.5

Thanks to Wayne E. Seguin for his help on irc.freenode.net #rvm (and for RVM in the first place!)

PS You may have to downgrade to 1.3.5 to get “rake gems:install” to work.