I'm not sure what you mean. It does support the notion of different configurations for different environments. It even supports the idea of "inheritance". Look at README.rdoc in the "inheritance" and "using in a Rails app" sections.

Instead of using different configs for each environment, it would be nice to be able to set the environments in the yml file like the database.yml file that rails uses.

Settingslogic supports this:
http://github.com/binarylogic/settingslogic/tree/master

app/config/application.yml

defaults: &defaults

cool:
  saweet: nested settings
neat_setting: 24
awesome_setting: <%= "Did you know 5 + 5 = " + (5 + 5) + "?" %>

development:

<<: *defaults
neat_setting: 800

test:

<<: *defaults

production:

<<: *defaults

Ok, I added support for that in 1.1.0. See the section "environments" in README.rdoc. The gem should be built shortly on github.