What are the advantages/disadvantages of the major Ruby VMs (things like features, compatibility, performance, and quirks?) I know there are also some bonus features like being able to use Java interfaces through JRuby, too. Those would also be helpful to note. Does any VM have a clear advantage at this point, and in what contexts?
I've used both Matz's Ruby and JRuby, and they solve different tasks. If you are developing a straight Ruby or Rails app, then that will probably suffice, but if there are some powerful Java libraries that would help a lot, then JRuby might be worthwhile.
I haven't done anything overly complicated, but JRuby seemed to match up pretty well, at least as far as implementing the core language features (I haven't run into any differences yet, but they may exist).
One little anecdote I wish to share... I was writing a script to interact with a DB2 database. The DB2 support in Ruby is abysmal... you have to install the whole DB2 express version just to be able to compile the Ruby drivers, which didn't even work for me. I got fed up and switched to JRuby, using JDBC and a few small DB2 JDBC jars. It resolved my problem perfectly. The point? Well, if gaining access to some Java libraries will simplify the problem at hand, by all means go for it!
I hope this was helpful! Sorry I don't have any experience with other VMs....
One more caveat I have read about, but I don't know the details too well... JRuby I think supports threading via Java threads, instead of the "green" threads supported in Matz's implementation... so if you want multithreading on multicore systems, JRuby will probably serve you better... unless you want to do the threading in C.
Here's a bit of info I scrounged up on the main VMs: Ruby MRI, Ruby 1.9 (YARV), JRuby, XRuby, Rubinius, and IronRuby
There was a performance benchmark last year that compared the major VMs, but with how quickly VM development has been it probably is not as relevant today. Ruby 1.9 was generally the fastest, and still has the edge over JRuby for now, I believe.
Four VMs are currently capable of running Ruby on Rails: Ruby MRI, Ruby 1.9, JRuby, and Rubinius.
XRuby runs on the JVM, as does JRuby, and compiles the Ruby source files to a Java .class.
IronRuby runs on .NET, making use of their DLR, and allows you to integrate Ruby with the .NET libraries and infrastructure. It cannot yet run Ruby on Rails.
There is also a VM called HotRuby that lets you run Ruby source code in the browser or in Flash.