Rails - Jun 2006 - Mysql: establish_connection''...development database not conf

I have tried for several hour to get a mysql db connection to work, but 
have failed so far:

This is a cpanel server running Mysql 4.1.19, fcgi with apache.

Here is the output from script/console

Loading development environment.
/usr/local/lib/ruby/gems/1.8/gems/activerecord-1.14.2/lib/active_record/connection_adapters/abstract/connection_specification.rb:194:in
`establish_connection'':ActiveRecord::AdapterNotSpecified: development 
database is not configured

database.yml:

development:
adapter: mysql
database: polydis_todolistdev
username: polydis_polydis
password: ******
host: localhost

test:
adapter: mysql
database: polydis_todolisttest
username: polydis_polydis
password: ******
host: localhost

production:
adapter: mysql
database: polydis_todolist
username: polydis_polydis
password: ******
host: localhost

There are no tabls in the file, and changing ENV[''RAILS_ENV'']
||=
''production'' in environment.rb did not help.

Ideas? (Please laso mention the obvious - I am at a complete loss here)

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