Ruby on rails does look good. I had someone demo it to me and build some basic functionality into a site.
Remember though that its only a tool which generates much of the tedious stuff for you. To be honest writing a similar system using a different language wouldn't be that hard, its just somebody has already done it in ruby.
I think its power would be for quick prototyping of ideas/functionality with the client sat there going 'wow, thats cool'.

PHP is a good tool as there is a good community and loads of resources to download code as either examples or to plug straight into your system.

Vim is better than notepad (though it can take a while to get used to!)