I've got a blogging service and would really like my customers to have the ability to export their blog from the site to Wordpress. Can someone guide me in creating OPML/XML format or other way to enable them to import I'm using Ruby on Rails 2.3.2.

Provide action which renders XML using view ActiveView and Builder. E.g. you may create export action in primary controller. Adding export.builder file for your controller in sights directory. Using Builder syntax generate OPML output.