I am using Lua right now to build a web application! Whatever happened to software developers that "do it yourself" got a bad name - too lazy, weaned on bloated megabytes of support libraries, or what? In reality, as others have pointed out, there is decent support, just not on the scale of Python, say. Lua is by far the fastest scripting language (especially with www.luajit.org around), and much, much cleaner as a language design than any other in its league out there. This is vital for long-term maintenance.
For those using lighttpd as their webserver (me included), the added bonus is that the full power of Lua is available for mod_magnet scripts, useful for synchronous request handling/rewriting-on-steroids.