I am using OS X 10.9.4. Recent Apple compiler technology. Apple supplied Ruby version is 2.0.0p451. Do you have all of these ingredients.
sudo gem install iStats
When I installed iStats v0.0.9, I had just downloaded the Command Line Tools (OS X 10.9) for Xcode Late July 2014 (Jul 21.). I just removed this version of iStat (sudo gem uninstall iStats), and then reinstalled it with the same release of command line tools. This is my output, which I expected, and it still functions normally when run:
odin: ~$ sudo gem install iStats
Fetching: iStats-0.0.9.gem (100%)
Building native extensions. This could take a while...
Successfully installed iStats-0.0.9
Parsing documentation for iStats-0.0.9
unable to convert "\xCA" from ASCII-8BIT to UTF-8 for ext/osx_stats/osx_stats.bundle, skipping
unable to convert "\xCA" from ASCII-8BIT to UTF-8 for ext/osx_stats/smc.o, skipping
unable to convert "\xCA" from ASCII-8BIT to UTF-8 for lib/osx_stats.bundle, skipping
Installing ri documentation for iStats-0.0.9
1 gem installed
Removing iStats gem again, I updated to the Command Line Tools (OS X 10.9) for Xcode Late August (Aug 18). The reinstallation process of iStats v0.0.9 produced identical output to the above, and a working iStats application.
Using the Ruby Version Manager (RVM) and Ruby v2.1.2, the gem installation was even cleaner:
odin: ~$ gem install iStats
Building native extensions. This could take a while...
Successfully installed iStats-0.0.9
Parsing documentation for iStats-0.0.9
Done installing documentation for iStats after 0 seconds
1 gem installed