How long have you had this problem? Did you just install Textile 2 or were you using Textile 2 before and it suddenly stopped working?
Incidentally, eliben got back to me – he’s not on Dreamhost. So the problem isn’t limited to Dreamhost. No idea why it works on some hosts and not on others (or why it would suddenly stop working on a given host).
Are you on Dreamhost, by any chance?