Database.yml and multi-stage Capistrano deployment blog post: http://www.cloudspace.com/blog/2009/09/18/database-yml-and-multi-stage-capistrano-deployment/

ChangingPasswords.rb

after "deploy:symlink", :update_config_file
after "deploy:symlink", :update_database_yml

DefineUpdateConfigFile.rb

PRODUCTION_DB_INTERNAL_IP = "1.2.3.4"

desc "Update database.yml with production information"
task :update_database_yml do
  replacements = { "DATABASE_IP" => PRODUCTION_DB_INTERNAL_IP }

  replacements.each_pair do |pattern, sub|
    run "sed -i 's/#{pattern}/#{sub}/' /path/to/deploy/current/config/database.yml"
  end
end