Upgrading the turnkey vm of redmine can be painful:
Hopefully this will take away some of the pain :)
cd /var/www
mv railsapp railsappOLD
svn co http://redmine.rubyforge.org/svn/branches/1.0-stable railsapp
cp ./railsappOLD/config/database.yml ./railsapp/config/database.yml
cp ./railsappOLD/config/email.yml ./railsapp/config/email.yml
cp -r ./railsappOLD/files ./railsapp/files
sudo chown -R root:www-data /var/www/railsapp
cd /var/www/railsapp
sudo chown -R www-data:www-data files log tmp
gem install rails -v=2.3.5
gem install rack
gem install rack -v=1.0.1
rake generate_session_store
gem install -v=0.4.2 i18n
rake generate_session_store
rake db:migrate RAILS_ENV=production
sudo chown -R www-data:www-data files log tmp public/plugin_assets
rake db:migrate:upgrade_plugin_migrations RAILS_ENV=production
rake db:migrate_plugins RAILS_ENV=production
sudo chmod -R 755 files log/ tmp/ public/plugin_assets
rake tmp:cache:clear
rake tmp:sessions:clear
sudo reboot
redmine turnkey linux