Correct datatype for latitude and longitude? (in activerecord)

This is what I use:

add_column :table_name, :lat, :decimal, {:precision=>10, :scale=>6}
add_column :table_name, :lng, :decimal, {:precision=>10, :scale=>6}

If you need to do more complex geographical calculations, you can investigate PostGIS for Postgresql or MySQL Spatial Extensions for MySQL. Otherwise, a float (double precision might be a good idea) should work.

Edit: It looks like the GeoRuby library includes a Rails extension for working with the spatial/GIS extensions for both of the aforementioned databases.