Doing a downgrade from Rails 3 to Rails 2 seems to me like a crazy thing to do for many reasons:
1) Rails 4 is already released. You should be looking to upgrade instead of downgrading.
2) There are many hosts out there that offer amazing services and even some free. Heroku is a great place to start if you don't want to manage your own server.
3) Rails 3 was almost a complete rewrite of the way Rails worked. This includes the addition of the Assets Pipeline which is a blessing in terms of development.
With that said, if you're still looking to downgrade, I would try to revert the steps found in many Upgrading Rails 2 to Rails 3 tutorials out there.
They are a bit long and many steps required to put here but a simple google search will yield many great resources. Here's a Railscasts http://railscasts.com/episodes/226-upgrading-to-rails-3-part-2