I'm running the Typo trunk (as of May 1, 2006) and find I am getting 500 errors often. They are random, but frequent enough for me to catch them when browsing my own site every once in a while.
I had heard "bad things" about Dreamhost regarding Rails before I signed up. I figured I'd give it a go before resorting to more expensive/less featureful Rails-specific hosting.
The wiki says add this to my dispatch.fcgi:
dispatcher_log :info, "asked to terminate immediately"
dispatcher_log :info, "frao handler working its magic!"
alias_method :exit_now_handler, :frao_handler
I did this and this made Typo not work at all. So much that I had to delete the entire directory and re-upload Typo for it to work again. I even tried using killall -USR1 dispatch.fcgi and killall -9 dispatch.fcgi and that didn't fix it; when I added the above code my site stopped responding and eventually gave 500 errors.
So I don't know what else to do. I have seen people say they no longer get 500s, but I certainly do, and I've followed everything they've said.