Was the cost of rewriting that small? In my view it would only make sense if the cost of rewriting the app is insignificant. If you can do it in a week or two, sure... any more than that and I would start to question if it's worth it. I mean, you gotta make sure it brings in money first, right? :-)
I'd like to hear more about why you switched from Sinatra to Rails. I'm primarily an Asp.net MVC dev who plays with Python/Ruby on the side, but Sinatra really interests me.