Thank you for that pointer. It is good to see that postgress improved the granularity of their locks and algorithms making deadlocks less likely. But I'm sure that it is still possible to cause deadlocks in postgress. So good code should still be able to handle a deadlock in the database and it should also deal with the side-effects in the rails code.

The good news is that, in PG's case, it's being fixed in the database itself.

I'm not sure, it's enough just to rerun the sql statement. You also need to continue at the right place in the try-block.
I think the problem boils down to: Deadlocks can be a serious issue that is not easy to deal with. Since rails is built with the assumption of a singler layer of cleverness you have to add rollback rails code to your except block as well.

retries = 0
begin
  MyModel.transaction do
     #do your stuff
  end
rescue ActiveRecord::StatmentInvalid => e
  # raise if e is not a deadlock
  # ROLLBACK your other rails variables, eg. counters.
  retries += 1
  raise if retries > 3
  retry
end

It would be nice if there was a plugin that would instead just re-run the sql statements again instead of the code itself.