I guess for me, if I think the controller logic would fit in one file, then Sinatra is great. Otherwise I'd go with Rails. Having said that, it depends on the type of problem you are trying to solve.
WordPress can be clunky, but you'd be hard pressed to write a better blogging platform from scratch in Rails in a reasonable amount of time.
faraco: I think Rails excels are making rapid prototypes of reasonably complicated apps which can be hardened to a production version without a herculean effort. Right now I'm working at a company where our main app is Rails. It's a financial company similar in some respects to the paypal button works.
So the domain logic is pretty complicated, but the code is organized in such a way that it's pretty easy to maintain and customize.