Update json gem to 1.7.7 due to vulnerabilities

See https://groups.google.com/forum/?fromgroups=#!topic/rubyonrails-security/4_YvCpLzL58
  Update rails gem to 3.2.12 due to vulnerabilities

  See http://weblog.rubyonrails.org/2013/2/11/SEC-ANN-Rails-3-2-12-3-1-11-and-2-3-17-have-been-released/