How do I upgrade Rails?

I am new to Ruby and Rails, as well as all this command line melarky. So please bear with me.

I have installed, RubyGems, Homebrew, RVM, Rails etc, by following various tutorials.

I think I have all of this going now, but when I type:

rails --version

I get, 3.2.12. I notice that Rails 4 is out. How do I upgrade to this version?

If I do:

gem install rails

Even doing:

gem update rails

I still get 3.2.12.

Any ideas?

UPDATE

When trying a few options here, I get this message returned...

Michaels-MacBook-Pro:~ ParanoidAndroid$ gem install rails --version=4.0
Building native extensions.  This could take a while...
ERROR:  Error installing rails:
    ERROR: Failed to build gem native extension.

    /usr/local/rvm/rubies/ruby-1.9.3-p392/bin/ruby extconf.rb
*** extconf.rb failed ***
Could not create Makefile due to some reason, probably lack of
necessary libraries and/or headers.  Check the mkmf.log file for more
details.  You may need configuration options.

Provided configuration options:
    --with-opt-dir
    --without-opt-dir
    --with-opt-include
    --without-opt-include=${opt-dir}/include
    --with-opt-lib
    --without-opt-lib=${opt-dir}/lib
    --with-make-prog
    --without-make-prog
    --srcdir=.
    --curdir
    --ruby=/usr/local/rvm/rubies/ruby-1.9.3-p392/bin/ruby
    --with-atomic_reference-dir
    --without-atomic_reference-dir
    --with-atomic_reference-include
    --without-atomic_reference-include=${atomic_reference-dir}/include
    --with-atomic_reference-lib
    --without-atomic_reference-lib=${atomic_reference-dir}/lib
/usr/local/rvm/rubies/ruby-1.9.3-p392/lib/ruby/1.9.1/mkmf.rb:381:in `try_do': The compiler failed to generate an executable file. (RuntimeError)
You have to install development tools first.
    from /usr/local/rvm/rubies/ruby-1.9.3-p392/lib/ruby/1.9.1/mkmf.rb:461:in `try_link0'
    from /usr/local/rvm/rubies/ruby-1.9.3-p392/lib/ruby/1.9.1/mkmf.rb:712:in `try_run'
    from extconf.rb:26:in `<main>'


Gem files will remain installed in /usr/local/rvm/gems/ruby-1.9.3-p392/gems/atomic-1.1.14 for inspection.
Results logged to /usr/local/rvm/gems/ruby-1.9.3-p392/gems/atomic-1.1.14/ext/gem_make.out

Seems there's an error happening. Any further ideas?

Thanks again everyone!