The JRuby team has accomplished an amazing thing, running Ruby on Rails with JRuby. So is Grails dead? No! Why should someone then use Grails and not JRuby on Rails? Ruby is a very nice and clean language, Rails has a lot of extensions and documentation. But Groovy is more similar to Java, like Java on steroids, is tighter integrated and has more appeal to Java developers. But to quote Oracle "at the end what you generate with Grails is a J2EE app, web container managed and deployed. You can manage it in the same way you manage any other J2EE app." via InfoQ.
Update: I really like Ruby 🙂 I've written a Ruby OR Mapper called Ruby.RDO and a web framework called Ruby.RO more than 4 years ago which focused on ease of use and components (think tapestry).