Appears to include the "psql" command-line client and related support libraries, but no server. The server might be present in Lion Server, which I don't have.
Most likely they were worried about breaking existing scripts since 1.8 has been the official Ruby of Mac OS X for pretty much its entire lifetime. Ruby 1.9 is better, but it did manage to break a decent number of programs.
Anyone know the versions of Python, Ruby, Apache, PHP, etc. that come installed with OS X Lion?