Are you using a Windows OS? It seems to be rather common for Windows users to have problems with SQLite3. Although AFAIK it's usually a problem with installing the GEM, not it's operation afterwards.
In any case, if you CD to the shovell folder and (use \ for Windows)
Do you see something like
and if you enter .tables do you see something like
SQLite version 3.6.1
Enter ".help" for instructions
Enter SQL statements terminated with a ";"
*some tables come later on in the book
schema_migrations taggings users
stories tags votes