Rails - Mar 2014 - What are the best strategies/practices for Rails upgradation from 2.3.11 to 4.0.0?

I would like to upgrade one of my application from rails -2.3.11 to 4.0.0. 
Before going to do anything, I just need plan for it and my application not 
that much of big size but got some 6/7 plugins and 5/6 gems.

Existed    : Ruby 1.8.7 + Rails 2.3.11
  Expected : Ruby 2.0.0 + Rails 4.0.0

   For this, I have plan as in two ways like below,
   1).Multi-step process : First need to upgrade app from rails 2.* to 3.* and
then
      do upgrade from rails 3.* to 4.0.0
   2).Create new application from rails - 4.0.0 and rebuild old application all 
      features as we have already css, layouts...


   I hope both strategies will take same time.

 Any how, I need some inputs from you all. So please share your
thoughts/comments.

     Thanks in advance.


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