Because memory is cheap nowadays, people use more of it, in the same way that most desktop OSs now couldn't boot on a 32MB machine, and often require something like 2GB of RAM just to function acceptably. Like money inflation, sometimes this is hard to accept :)

Of course Rails comes with a whole load of convenience code built in, which is loaded for each process and not always shared, people use gems, which are also loaded, people add apps on top, and people use in-memory caches etc. Those figures I quoted are for real world apps which pull in quite a lot of other code, though they are just taken from top/passenger-memory-stats, so take that with a pinch of salt. People use all that code because it's easier than reinventing the world each time, and developer time costs more than memory over the long term as sites are developed.

If you want to cut things right down, hello world in rails is around 40MB. Sinatra (another rack-based Ruby framework) does less and consumes about 20MB per process, so less again. A bare-bones script doing direct db access and some string manipulation (similar to those you were running back in the 90s) would probably take far less again and fit easily on your 32MB server, or of course perl is perfectly adequate too and might take less again (sorry no idea there) if you don't use a framework.

I suspect for most frameworks that you might use in perl though you'd see similar resource usage nowadays, simply because the resources are there and there is less cost for memory, and more cost for development time. Would be interesting to see figures for other frameworks/platforms which do similar work to Rails, as many are probably better on this front. Revel in Go for example takes around 5MB for a simple app, but it does far less at present - I suspect it'd remain far better for memory and performance though, even with extras like an ORM.