This looks cool, but I have one question: what is the source of the Ruby 1.9 dependency? I'd love to use this on a couple apps I host at Heroku, but they're on 1.8.6.
Google web optimizer is a very cumbersome tool. Vanity is designed to work seamlessly in a Ruby/Rails environment. It even has a built in dashboard and reporting system! Also, its server-side, not client-side, which can really be useful in most cases.
I was very impressed with this when I saw it at RubyConf 09!
This is a rails gem, so you get all the benefits of integration with the web framework. As far as I know, GWO does A/B testing between hardcoded URLs, so the logic is then split between GWO (to redirect to the correct page) and your app (to serve the correct content for that page).