I worked on this for another twenty minutes or so. found the bug. Run it in a terminal and you can see it run.

conway.rb

class Conway
attr_reader :displayrange
attr_accessor :board
# Any live cell with fewer than two live neighbours dies, as if caused by under-population.
# Any live cell with two or three live neighbours lives on to the next generation.
# Any live cell with more than three live neighbours dies, as if by overcrowding.
# Any dead cell with exactly three live neighbours becomes a live cell, as if by reproduction.
  def initialize disprange = nil
    @board = { 1 => { 2 => 1}, 2 => { 2 => 1}, 3 => { 2 => 1} }
    @displayrange = disprange.nil? ? (0..10) : disprange
  end

  def randomize n=30
    @board = {}
    (0..n).each {
      _x = srand % @displayrange.max
      _y = srand % @displayrange.max
      @board[_x].nil? ? @board[_x] = {_y => 1} : @board[_x][_y] = 1
    }
  end

  def neighbor_ar x,y
    [[x - 1, y + 1],
     [x, y + 1],
     [x + 1, y + 1],
     [x - 1, y],
     [x + 1, y],
     [x - 1, y - 1],
     [x, y - 1],
     [x + 1, y - 1]]
  end

  def is_alive x,y,vv=false
    neighbors = neighbor_ar x,y
    currently_alive = begin @board[x][y] rescue 0 end
    _res = neighbors.collect {|n,m| @board[n].nil? ? 0 :  (@board[n][m].nil? ? 0 : @board[n][m])}
    _ncount = _res.inject(0) {|k,v| k + v }
    _slot = if [2,3].include?(_ncount) && currently_alive == 1
              1
            elsif (_ncount == 3) && currently_alive != 1
              1
            else
              0
            end
    _slot
  end

  def generation disp=false
    nboard = {}
    self.displayrange.each {|i|
      line = ""
      nboard[i] = {}
      self.displayrange.each {|j|
        nboard[i][j] = self.is_alive(i,j)
        line << "+" if nboard[i][j] == 1
        line << " " if nboard[i][j] == 0
      }
      puts "|#{line}|" if disp
    }
    @board = nboard
  end

end

c = Conway.new 0..30
c.randomize 175
while true do
  puts "\e[H\e[2J"
  c.generation true
  sleep(1)
end