xRefresh-server install hangs at Bulk updating Gem on my Mac (10.5.8)

I can not seem to install the xrefresh-server on my mac. When I run the command:
$ sudo gem install xrefresh-server

It just hangs at:

"Bulk updating Gem source index for: http://gems.rubyforge.org
Building native extensions. This could take a while..."

And the after a minute or so spits out...

ERROR: Error installing xrefresh-server:
ERROR: Failed to build gem native extension.

/System/Library/Frameworks/Ruby.framework/Versions/1.8/usr/bin/ruby extconf.rb install xrefresh-server
can't find header files for ruby.

Gem files will remain installed in /Library/Ruby/Gems/1.8/gems/json-1.1.9 for inspection.
Results logged to /Library/Ruby/Gems/1.8/gems/json-1.1.9/ext/json/ext/generator/gem_make.out

What am I doing wrong?

I am running OSX 10.5.8 and have installed both Ruby Cocoa and the latest xRefresh extension.