I'm posting my solution for the other sleep-deprived souls out there:
If you're using RVM, double-check that you're in the correct folder, using the correct ruby version and gemset. I had an array of terminal tabs open, and one of them was in a different directory. typing "rails console" produced the error because my default rails distro is 2.3.x.
I noticed the error on my part, cd'd to the correct directory, and my .rvmrc file did the rest.
RVM is not like Git. In git, changing branches in one shell changes it everywhere. It's literally rewriting the files in question. RVM, on the other hand, is just setting shell variables, and must be set for each new shell you open.
In case you're not familiar with .rvmrc, you can put a file with that name in any directory, and rvm will pick it up and use the version/gemset specified therein, whenever you change to that directory. Here's a sample .rvmrc file:
rvm use 1.9.2@turtles
This will switch to the latest version of ruby 1.9.2 in your RVM collection, using the gemset "turtles". Now you can open up a hundred tabs in Terminal (as I end up doing) and never worry about the ruby version it's pointing to.