uninitialized constant I18n (NameError) error while creating new rails application

I am just trying to crate a new application in rails. and i ended up with this error.

sanjaya@sanjaya:~/myprojtest$ rails new blog

/usr/local/lib/ruby/gems/1.8/gems/activesupport-3.0.7/lib/active_support/multibyte.rb:39: warning: already initialized constant VALID_CHARACTER /usr/local/lib/ruby/gems/1.8/gems/activesupport-3.0.7/lib/active_support/i18n.rb:9: uninitialized constant I18n (NameError)

from /usr/local/lib/ruby/gems/1.8/gems/i18n-0.5.4/lib/i18n/version.rb:1
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `gem_original_require'
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `require'
from /usr/local/lib/ruby/gems/1.8/gems/i18n-0.5.4/lib/i18n.rb:1
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `gem_original_require'
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `require'
from /usr/local/lib/ruby/gems/1.8/gems/activesupport-3.0.7/lib/active_support/i18n.rb:2
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `gem_original_require'
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `require'
from /usr/local/lib/ruby/gems/1.8/gems/activesupport-3.0.7/lib/active_support/inflector/transliterate.rb:3
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `gem_original_require'
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `require'
from /usr/local/lib/ruby/gems/1.8/gems/activesupport-3.0.7/lib/active_support/core_ext/string/inflections.rb:3
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `gem_original_require'
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `require'
from /usr/local/lib/ruby/gems/1.8/gems/railties-3.0.7/lib/rails/generators.rb:10
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `gem_original_require'
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `require'
from /usr/local/lib/ruby/gems/1.8/gems/railties-3.0.7/lib/rails/commands/application.rb:15
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `gem_original_require'
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `require'
from /usr/local/lib/ruby/gems/1.8/gems/railties-3.0.7/lib/rails/cli.rb:14
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `gem_original_require'
from /usr/local/lib/ruby/site_ruby/1.8/rubygems/core_ext/kernel_require.rb:69:in `require'
from /usr/local/lib/ruby/gems/1.8/gems/rails-3.0.7/bin/rails:4
from /usr/local/bin/rails:23:in `load'
from /usr/local/bin/rails:23