Sorry it's taken a while to get back to you. I've figured out the problem with Heroku and have updated the README. This issue has happened because we have made the upgrade to Rails 3.1, so please bear with us as we iron out problems like this.
Heroku has multiple platforms, called 'stacks'. Your app has been created on the 'bamboo' stack, but this stack does not have full support for Rails 3.1, which we have recently updated to.
However, Heroku has a new stack called 'cedar', and this stack automatically precompiles assets whenever you deploy.
Unfortunately, at the moment you cannot migrate your app from 'bamboo' to 'cedar'. So if you want to run the Rails 3.1 Fat Free CRM on the new cedar stack, you will need to pull your database to your local machine, create a new application using the cedar stack (follow the updated README), and then push your locally saved database to the new application. You can follow this blog post for details on how to push and pull databases: http://blog.heroku.com/archives/2009/3/18/push_and_pull_databases_to_and_from_heroku
I hope that wasn't too much information to process. Please do let me know if you have any problems, or if I need to clarify any of these details.
> Also, I think it might be helpful to include a list of known limitations with Heroku. For example, can we send email notifications?
> Can we use avatars? I'm both asking for myself because I'm not sure yet, and also so it can be included in the documentation. :)
You can send email notifications using the free SendGrid addon. (I haven't tested this yet, but we could add instructions to the documentation.)
Avatars cannot be uploaded, since Heroku apps are deployed to a read-only filesystem. There is a way to store uploaded files in Amazon S3, but I don't have an account to test / support this. I don't know if it's too important though, since gravatars will still be looked up from the user's/contact's email address.
I know, a while back, I posted about some find and replace hack I did to get things working on Heroku. Anyone know if this is still required? Is the documentation missing a step?
Also, I think it might be helpful to include a list of known limitations with Heroku. For example, can we send email notifications? Can we use avatars? I'm both asking for myself because I'm not sure yet, and also so it can be included in the documentation. :)