Cannot start rails server after upgrade from 2.3.18 to 3.1.0

After upgrading from rails 2.3.18 to rails 3.1.0, I tried runnning

rails s

and I get the following error:

Bundler is using a binstub that was created for a different gem.
This is deprecated, in future versions you may need to bundle binstub rails to work around a system/bundle conflict.

What could be a good approach here?