Does any one know what this error mean... I am trying to install rails gem on mac os x from the terminal issuing this command:

sudo gem install rails
and I'm getting this error:

Building native extensions.  This could take a while...
ERROR:  Error installing rails:
	ERROR: Failed to build gem native extension.

        /System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/bin/ruby extconf.rb
mkmf.rb can't find header files for ruby at /System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/lib/ruby/ruby.h

Gem files will remain installed in /Library/Ruby/Gems/1.8/gems/json-1.6.6 for inspection.
Results logged to /Library/Ruby/Gems/1.8/gems/json-1.6.6/ext/json/ext/generator/gem_make.out
I have no clue as what all this mean. Please help.