Foreword and disclaimer: I work for DotCloud; so the following might be biased. You ve been warned.

DotCloud could be interesting for you if you like the following features:

• run something else than Ruby (what about some Django or Pylons code talking with your SQL DB? Or even some PHP blog like WordPress or Drupal, using the same user authentication database?)
• experiment with databases like Redis or MongoDB, or background ruby workers, without paying for add-ons
• SSH access, crontab access (without requiring an add-on)
• cheaper workers (I didn t come up with this one; some of our users coming from the Heroku world told us that workers were insanely expensive there)

Duostack is indeed very nice if you want to mix specifically Rails and Node.js. I ve been told that they had awesome auto-configuration facilities.

Finally, if you only plan to do Rails and nothing else, ever, you might as well stick with Heroku since they ve been in that business for a while, and are probably more mature than the first two of the batch.

Shameless plug: DotCloud is offering a beta test drive; so if you want to see what it looks like, just subscribe to the beta and you will be quickly enough be able to see for yourself. Heroku has a free tier as well.

You could add EngineYard in the mix - but i d be inclined to use Heroku as my first choice, Dotcloud second (it s a newish product, and is very good but still in development)

If you want more control over your app/servers or want to run it on any cloud or your own infrastructure without having to download/deploy anything, you can try Cloud 66 (www.cloud66.com)

Disclaimer: I work for Cloud 66

A lot has changed on the scene since this question was asked. We recently looked into these services and settled on Heroku, but even more recently decided to continue managing my own deployments directly on EC2. Here are some points not mentioned in the other answers.

Heroku

• Now supports much more than just ruby
• Has really great-looking support for PostgreSQL
• Uses LXC for process containers, like DotCloud

DotCloud

• Is now Docker, and is putting a lot of manpower into developing docker.io
• Doesn t have a free tier any more

I m not sure if DotCloud is using Docker internally or not, since the docs say explicitly it isn t production-ready yet.

Our decision to stick with plain EC2 was motivated by the fact that it s cheaper and affords a lot more flexibility. For example, we use local-only http servers behind our public server to do some of our request processing, which doesn t really fit into the PaaS models out there. We would have had to reimplement all our back-end components as redis workers, and pay for them as additional dynos. The fact that Amazon RDS now supports PostgreSQL was also a compelling factor. Incidentally, Amazon has a full-stack PaaS offering as well, Elastic Beanstalk.

Just stumbled upon the question. There are similar ones around here. The problem is also: The PaaS scene is changing very quickly. New vendors are popping in every week or so.

Nowadays OpenShift from Red Hat might also be mentioned here as a Ruby PaaS.

OFFTOPIC + shameless plug: I have compiled a list of PHP PaaS here: http://blog.fortrabbit.com/comparing-cloud-hosting-platforms/