What operating system do you recommend. Currently I have Vista installed but it isn't developer friendly. I'm doing rails apps and learning Android development an Appcelerator. Oh, and haven't the budget for a Mac :(
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4Ubuntu. Rails and Windows don't really mix well. And you can still dual-boot into Windows if you need it for other stuff.
Get Linux (like Ubuntu) and run it in VMWare or VirtualBox. This way you can still test your Rails apps against Internet Explorer without rebooting.
Linux is really the way to go with Android and Rails development, since that's their native environment. Plus it's zero cost, zero risk to try.
Your two most popular Linux flavors are "Redhat-ish" and "Debian-ish". Fedora is the most popular of the Redhat flavor, and Ubuntu is the most popular Debian flavor. Which one you choose is a matter of taste; you'll find the same programs on both sides, though they may be configured differently.
Fedora has a very fast release cycle, and uses bleeding edge technology, since the OS serves as a testing ground for technology that will later find it's way into the enterprise products. It's useful to use a Fedora desktop if you'll be moving your product to RedHat (or CentOS) servers, since the environments are very similar. Fedora can be frustrating to new users due to decisions they don't understand (like the difficulty in finding and installing MP3 support).
Ubuntu is styled as Linux for the average user, and makes usability the primary consideration. Ubuntu takes additional steps to make the environment easier for people new to Linux, such as pointing out which non-free (as in speech) packages could be installed to improve the experience. Ubuntu is currently the most popular version of Linux, and most widely recommended to new users.