kratos-iii:railsproj zachinglis$ rake db:create
(in /Users/zachinglis/Sites/rails/railsproj)
Couldn\'t create database for {\"adapter\"=>\"mysql\", \"host\"=>\
I happened on same problem after installing new database server MySQL5.0 to 5.1. If you have installed new db-server, Your mysql gem library is not suitable for your database server. You may solve this by reinstall mysql gem lib.
sudo env ARCHFLAGS="-arch i386" gem install mysql -- --with-mysql-config=/your/mysql_config