While implementing Sur Max’s excellent Simple Captcha plugin, I ran into a very frustrating issue. No matter what was entered, the valid_with_captcha? method always returned false.
After some digging I finally realized that there was a conflict with restful_authentication. The resolution is simple, luckily. You just need to add the following to your user controller:
attr_accessible :captcha, :captcha_key
That did it for me! Hopefully this will help someone else as well.