I had a similar problem. It turned out that i made a typo in store_controller.erb. In the index action, instead of 
if params[:set_locale]
I wrote 
if params[:locale]
and couldn’t select Espanol.
I’ve had issues with the language box in Safari 5, I can’t select Espanol. the code for that is in: store.html.erg 

<%= select_tag 'locale', options_for_select(LANGUAGES, I18n.locale), :onchange => 'this.form.submit()' %>
Anyone knows the answer?
On mine (Rails 2.3.8) I had to add .to_s to I18n.locale as it returns a symbol, not a string. 

<%= select_tag 'locale', options_for_select(LANGUAGES, I18n.locale.to_s), :onchange => 'this.form.submit()' %>