Builder 3.0 is not compatible with fast_xs 0.8.0 on ruby 1.8.7 and will give this error. Perhaps you have that installed? (also note that Hpricot bundles fast_xs 0.8.0)
(edit:) you can monkey patch it by dropping this in your config dir:
class String def fast_xs_absorb_args(*args); fast_xs; end alias_method :to_xs, :fast_xs_absorb_argsend