Why does my rails command always create a new application?

Forgive me as I'm new to both *nix and ruby on rails. My rails command always creates a new application and I can't figure out why. Running "rails new myApp" will just generate a new rails application named "new" in the current directory. Likewise "rails server" just creates a new application in a folder named "server". Any ideas? I'm using Ubuntu 11.04 and rails 3.0.9.