uninitialized constant ApplicationController
Turns out, among the Major changes that came along with the latest Release of Ruby on Rails, there were a few minor ones too. One of those is that the application controller is no longer called application.rb Now it's referred to as application_controller.rb.
In effect, to solve this problem, just rename the file. Or, as Liam points out in the comments below, run:
Be sure to update your server stack before deploying. Obviously if you rename the file to get it working on Rails 2.3 and upload to a Rails 2.2 server you'll be in trouble. Don't forget that Rails 2.3 also requires a new version of Phusion Passenger!