1.8.7 remains popular, but is declining, and for good reason. While there are some areas where 1.9 branches gave up ground (I'm looking at you `require` [1]), there are other areas where it absolutely smokes older versions; like date formatting functions [2]. Fortunately, Rails processes run for a long time under most app servers, so the performance regression of `require` isn't a huge deal. It is, however, very common to format dates as part of output, which may happen on hundres or thousands of records. There are also some nice features of 1.9 branches that are useful in a practical sense. For example, hash order is presered in Hash under 1.9, so you can get the extra features of a hash, and avoid superfulous sorting (can result in big compute savings).
1.9.3 is great for production. You give up a bit of memory savings compared to REE (since Ruby proper won't be COW-friendly until 2.0), but 1.9.3 in general is faster, has a lot more features, and is widely supported by gems and libraries now.
1.8.7 has been EOL'd, which is as good a reason as any to upgrade.
