Here are two good sources of great Rails apps - Ruby on Rails official site listing and happycodr.com (thanks danahern , you learn something new every day).  Chime in with your favorite app and why.  For developers, happycodr shows you the ins and outs of which rails gems are used on each project.

MTV has two sites right now running on rails with 40 million page views per day!  This has to be one of the largest rails apps out there.  43things , 43places et al are also big.

I just saw this on facebook, they are doing 2 to 3 million page views per month and their site looks great  - bestuff