Unable to obtain stable firefox connection in 60 seconds (127.0.0.1:7055)

I had the same problem (on Linux). Fixed with:

gem update selenium-webdriver

Now I am using ruby 1.9.3-p286, selenium-webdriver 2.29.0, firefox 18.0
As well as rspec-rails 2.9.0, capybara 1.1.2, and capybara-webkit 0.12.1

I added selenium-webdriver 2.29.0 to my Gemfile to be safe.

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