Currently there's quite a debate raging over the relative merits of Groovy and JRuby as scripting languages running on the Java virtual machine. Curious minds want to know - which of these languages will win this upcoming language war? People want to know which language to pick for a project, or which language to commit to learn.
Perhaps the first thing to point out is that it's perhaps rather unfair to see this as a race between these particular two horses. Scripting has been available on the JVM for a long time. Jython, a Java implementation of Python, has been around for several years. There's plenty of other, more obscure languages, which I daren't mention for fear of offending all the ones I miss out.
JRuby has got a lot of attention due to the attention of the Ruby language generally - attention particularly ignited by the interest around Rails. We've seen a sharp spike of interest around Ruby and Rails work at ThoughtWorks, and JRuby adds an extra dimension since it allows people to deploy Rails applications using their existing Java infrastructure.
Groovy gets its attention because it, more than any other language, is designed to work seamlessly with the JVM, and got a lot of attention from an early JSR.
Personally I'd dropped Groovy from my radar a couple of years ago when its development seemed to bog down. With its 1.0 release and further interesting positive vibes from some of my colleagues I've started to pay attention again.
Lets begin by talking about similarities. Both JRuby and Groovy (and indeed Jython) are modern OO scripting languages. They combine the well-chosen terseness of scripting languages with good solid structures for building larger programs. As such they are suitable both for classical scripting and for writing larger programs. Both are comfortable with dynamic type checking, although Groovy does offer some static facilities too. Both support Closures which are an important feature for the greater expressiveness that people want from this kind of language.
The biggest difference between them is their broader platform philosophy. Groovy is designed to be a scripting language for Java. As much as possible its syntax tries to match the equivalent in Java. (Including such ugly things as the default fall-through in switch statements.) It also works with Java's class library directly, although it dynamically adds many methods to Java's classes, vital in order to make use of things like closures.
JRuby, however, is a Java implementation of the Ruby platform. Ruby can run directly on mainstream operating systems with a C runtime, and is starting to run on .NET's CLR. When you program in JRuby you primarily use Ruby's libraries which are implemented in Java, and may also use Java's libraries at your discretion. If you stick to Ruby's libraries, or at least wrap any foreign elements, you can run Ruby programs on the C, Java, or (in time) .NET runtimes. So you can use JRuby to both run Ruby programs on the JVM and as a language for scripting the JVM.
One of the big differences between JRuby and Jython is around the libraries. One of the tricky aspects of porting this kind of scripting language to the JVM is that these languages are usually closely intertwined with libraries implemented in C. Porting these libraries to Java involves rewriting the libraries in Java. Jython didn't do much of this, as a result many Python apps can't run in Jython. However the JRuby implementers decided from early on that their goal was to run Rails apps, as a result many libraries including all the Ruby standard libraries needed to be ported.
The fact that JRuby is a Ruby platform on the JVM means that in JRuby you have two kinds of objects - JRuby objects and Java objects. Although there are ways for the two to talk to each other and to convert there is a difference. There are times when you need to know whether you're dealing with a Java string or a JRuby string. With Groovy you don't have that boundary, there are just Java objects.
It's too early, or rather too difficult, to say if one language will win out. Both are pretty young, only just finding their feet on the JVM. On a more personal level, your choice has a lot to do with what you expect to do with it. If you are only interested in running on the JVM, then Groovy could well be the easier choice. You are working directly with Java's library and object model, and the syntax requires less getting used to. A strong reason to prefer Ruby is the fact that it lives in multiple implementations. Ruby is a tool you can use in a lot of other places. As a long time Rubyist, there's not much incentive for me personally to get heavily into Groovy, even though I actually like the language a lot from what I've seen of it.
Rails is an important factor. The Java world is hardly lacking in web frameworks, but Rails is widely liked by those who've used it. I've not got many reports yet about Grails (the Groovy knock-off) so can't give a firm opinion on that. But I can imagine that the ability to deploy web apps with Rails could be a major factor in making JRuby popular. Something else to look at is the growth of RSpec as a new spin on testing environments.
With any platform it's as important to consider the people involved in the community as much as any technical factors. Good people can overcome technical weaknesses quickly and a vibrant community is a potent source for big innovations. RubyPeople have formed a particularly strong community, which has already spawned things like Rails, Rake, and Rspec.
Will either matter to Java? After all Jython's been around for a long time without making a huge impact on the JVM. Tool support is frankly pathetic for any of these languages when you compare it to what you have for Java at the moment.
I think we're actually at an inflection point with Java. Until recently the Java cry was One VM and OneLanguage. (As opposed to the CLR which was one VM and many languages, providing they're C# or VB.) This seems to be changing as people realize the limitations of Java and begin to seek out different capabilities. It's likely the future will see multiple languages closely integrated within the JVM.
There are plenty of people who dislike the hype around Rails and Ruby. But even if you dislike Ruby, the hype has led to a resurgence of interest in new languages. I doubt if the interest in Groovy would be anywhere near as great as it is if it wasn't for this hype, nor would Jython be awaking from its slumbers. The ruby/rails hype has also generated interest in other exotic JVM languages. The really nice thing here is that the JRuby people have been encouraging their dynamic rivals - recognizing that the point here is to encourage multi-lingual inter-operability and innovation.