Actually, per the instructions:
The tarball contains two main directories. You’ll need a virtual host
set up something like this
php_value include_path .:/path/to/pastebin/lib
php_value register_globals off
RewriteRule /([a-z0-9]+) /pastebin.php?show=$1
This is not done in php.ini (though you could set the php_value settings that way). On DreamHost, if you use PHP5, the register globals are already set to off, but the include_path is not set correctly.
As I said, you can set it yourself via php.ini, or you can do as the instructions say further down the page:
"You can, if you wish, simply copy the contents of the lib directory into the same directory as pastebin.php … "
As you cannot write to the default php_include dir, this might be the way to go if you don’t want to re-configure your php.ini. Note that the suggestion, "“The main element here is to ensure that the lib directory is on the search path. You could alternatively place your settings in an .htaccess file if you wish,” will not work on DreamHost’s PHP-CGI installation (that will work only with mod_php).