I recently ran into an issue after upgrading my gems in which capistrano would fail during the SSH known_hosts verification. I’m on OS X with capistrano 1.4.1, net-ssh 1.1.0 and can manually SSH to the deploy machine. A little googling turned up an easy work around for the problem. Simply add the following line to your deploy.rb and capistrano will skip the known_hosts verification.
ssh_options[:paranoid] = false |
