You need the ruby-debug available in your Gemfile for debugger to work

Author: David Heinemeier Hansson

activesupport/lib/active_support/core_ext/kernel/debugger.rb

@@ -2,7 +2,7 @@ module Kernel
   unless respond_to?(:debugger)
     # Starts a debugging session if ruby-debug has been loaded (call rails server --debugger to do load it).
     def debugger
-      message = "\n***** Debugger requested, but was not available: Start server with --debugger to enable *****\n"
+      message = "\n***** Debugger requested, but was not available (ensure ruby-debug is listed in Gemfile/installed as gem): Start server with --debugger to enable *****\n"
       defined?(Rails) ? Rails.logger.info(message) : $stderr.puts(message)
     end
   end

railties/lib/rails/generators/rails/app/templates/Gemfile

@@ -23,6 +23,9 @@ gem '<%= gem_for_database %>'<% if require_for_database %>, :require => '<%= req
 # Deploy with Capistrano
 # gem 'capistrano'
 
+# To use debugger
+# gem 'ruby-debug'
+
 # Bundle the extra gems:
 # gem 'bj'
 # gem 'nokogiri', '1.4.1'