For the first release we wanted a stack of projects that "just worked", rather than the latest release of everything. We have a lot more confidence that a new developer to Rails, if using Ruby 1.8.7 from RubyInstaller will have a good development experience, today.
The intent is to upgrade RailsInstaller to Ruby 1.9.2 definitely. For the first release, we went with 1.8.7 to maximize the likelihood of pleasant experiences.
I'd like an integration test suite around RailsInstaller for common use cases of Rails (and other common ecosystem tools, like git). That might go hand in hand with the promotion of ruby 1.9.2 on Windows.
Over the last year I've done a few workshops for folks on Windows and I can tell you that you are spot on with your dicision to use 1.8.7 for now. It's so much more stable on Windows. The target audience for this package doesn't understand the various nuances that exist with Ruby, and really just expects things to work. With 1.9.2, I can get a newbie through an introductory class and tutorial, but as soon as they go outside and try to follow a RailsCast with a newer library, stuff starts getting weird.
I hope that this increases visibility on Windows so that gem maintainers will pay more attention to that audience when developing and improving their libraries.
Ruby 1.9.1 was only a development release anyway. Ruby 1.9.2 is a full, production release (and the first of the Ruby 1.9.x releases to be so). Ruby 1.9.2 isn't particularly "in flux" but Ruby 1.9 is generally with Ruby 1.9.3 expected by the end of the year.