Apache ruby-passenger module throws an error

I had a nicely working Ruby on Rails server and I started upgrading my application to RoR 3.0. From the server perspective I just updated gems and installed some new ones.

Now Apache throws this error on startup:

[Tue May 03 16:33:39 2011] [error] *** Passenger could not be initialized because of this error: Unable to start the Phusion Passenger watchdog because its executable (/usr/lib/phusion-passenger/agents/PassengerWatchdog) does not exist. This probably means that your Phusion Passenger installation is broken or incomplete, or that your ‘PassengerRoot’ directive is set to the wrong value. Please reinstall Phusion Passenger or fix your ‘PassengerRoot’ directive, whichever is applicable.

Any idea what it means? What is PassengerWatchdog?

OK, this is weird… I have this line in /etc/apache2/conf.d/mod_passenger.conf:

PassengerRoot "/usr/lib64/ruby/gems/1.8/gems/passenger-3.0.7"

And when I did

# ln -s /usr/lib64/ruby/gems/1.8/gems/passenger-3.0.7 /usr/lib/phusion-passenger

it started working. Why does the module ignore my PassengerRoot parameter?