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answers:

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I have not done much RoR development. Most I've done is played around with it or went over few chapters in AWDR book.

Now, though, I'm starting to do a real project in Rails and one of the client requirement is that they want the DB to be PostgreSQL. I know that rails comes with its own SqlLite.

I am wondering what is the best option for me? Should I develop everything locally (using SqlLite) and later port everything to PostgreSQL or start out with setting up PostgreSQL and have rails talk to PostgreSQL.

Any links that show rails set up with postgresql would help.

+2  A: 

I think developing with live requirements is better than anything else. So, I would install postgres (haven't done yet with rails only with Java)

Take a look: http://wiki.rubyonrails.org/database-support/postgres

Newbie
I agree. I use postgres with rails on a very large database using many postgresql goodies (triggers, rules, views, etc.) and haven't found rails support for postgresql to be lacking in any way.
Wayne Conrad
A: 

It depends on the complexity of your queries.

If you have complex custom queries which cannot be handled by SQLite it would be a good idea to install PostgreSQL.

But normally it would be enough to write tests which will be run on the test environment (which should be PostgreSQL. So after the tests ran well you probably won't have any problem on the production environment.

KARASZI István