uninitialized constant Encoding

When trying trying to run "rake db:migrate" on a Ruby on Rails (rails 2.3.4) app using sqlite3, I ran across this error (on a new dev server):

rake aborted!
uninitialized constant Encoding

I noticed that we had the following two gems installed:

sqlite3 (0.0.8)
sqlite3-ruby (1.2.5)

Removing the first one solved the problem. Short and sweet. Hope this helps!