Bundler could not find compatible versions for gem "bundler":

First verify your versions to be sure they're all current:

$ ruby -v
ruby 1.9.3p125 (2012-02-16 revision 34643) [x86_64-linux]

$ rails -v          
Rails 3.2.2

$ gem list bundler
*** LOCAL GEMS ***
bundler (1.1.3)

If you need to update ruby, you can download it from https://www.ruby-lang.org or use tools like ruby-build. If you have any version of Ruby 1.9.3 that's fine for now.

To update all your gems:

gem update --system
gem update

Gem may install gems in a few different places, and these can interfere with each other. There are system gems (typically installed by root or by using sudo) and your personal user gems. My favorite way to manage these is with a simple tool called rbenv. A related tool is rvm. Either is fine.

For your first tutorial, you can skip using version numbers in your Gemfile:

- gem 'sqlite3-ruby', '1.2.5', :require => 'sqlite3'
+ gem 'sqlite3-ruby', :require => 'sqlite3'

Bundler will sort everything out the right way. Eventually you'll want to specify version numbers if you're coordinating with other developers, or building production systems.

Feel free to ask questions here and I'll add to this answer.

it is because gems are also installed in global gemset, and you can uninstall it using:

rvm @global do gem uninstall bundler

but you can also use the other version of bundler using:

gem install bundler -v '~>1.0.0'
bundle _1.0.0_ install

replace 1.0.0 with the version that got installed (if other)