Nginx – “768 worker_connections are not enough” error after a fresh installation of nginx and ROR

I have a fresh installation of nginx and ruby on rails. But it gives me a '500 Internal Server Error' while testing.

The error.log for my app has the following:

2014/05/01 17:27:15 [alert] 1423#0: *6892 768 worker_connections are not enough while connecting to upstream, client: 24.15.27.113, server: example.com, request: "GET / HTTP/1.0", upstream: "http://24.15.27.113:80/", host: "myapp"
2014/05/01 17:27:16 [alert] 1423#0: *7656 768 worker_connections are not enough while connecting to upstream, client: 24.15.27.113, server: example.com, request: "GET /favicon.ico HTTP/1.0", upstream: "http://24.15.27.113:80/favicon.ico", host: "myapp"
2014/05/01 17:45:50 [alert] 1453#0: *766 768 worker_connections are not enough while connecting to upstream, client: 24.15.27.113, server: example.com, request: "GET / HTTP/1.0", upstream: "http://24.15.27.113:80/", host: "myapp"
2014/05/01 17:45:50 [alert] 1453#0: *1530 768 worker_connections are not enough while connecting to upstream, client: 24.15.27.113, server: example.com, request: "GET /favicon.ico HTTP/1.0", upstream: "http://24.15.27.113:80/favicon.ico", host: "myapp"

The nginx.conf has the following:

user www-data;
worker_processes 4;
pid /var/run/nginx.pid;

events {
    worker_connections 768;
}

http {

    ##
    # Basic Settings
    ##

    sendfile on;
    tcp_nopush on;
    tcp_nodelay on;
    keepalive_timeout 65;
    types_hash_max_size 2048;

    include /etc/nginx/mime.types;
    default_type application/octet-stream;

    ##
    # Logging Settings
    ##

    access_log /var/log/nginx/access.log;
    error_log /var/log/nginx/error.log;

    ##
    # Gzip Settings
    ##

    gzip on;
    gzip_disable "msie6";

    ##
    # Virtual Host Configs
    ##

    include /etc/nginx/conf.d/*.conf;
    include /etc/nginx/sites-enabled/*;

    fastcgi_buffers 8 16k;
    fastcgi_buffer_size 32k;
}

myapp.example.com config file:

upstream myapp {
  #server 24.15.27.113;
  #server 24.15.27.113:3001;
  #server 24.15.27.113:3002;
  server 127.0.0.1:3000;
  server 127.0.0.1:3001;
  #server 127.0.0.1:3002;
}
server {
  listen   80;
  server_name .example.com;

  access_log /var/www/myapp.example.com/log/access.log;
  error_log  /var/www/myapp.example.com/log/error.log;
  root     /var/www/myapp.example.com;
  index    index.html;

  location / {
    proxy_set_header  X-Real-IP  $remote_addr;
    proxy_set_header  X-Forwarded-For $proxy_add_x_forwarded_for;
    proxy_set_header  Host $http_host;
    proxy_redirect  off;
    try_files /system/maintenance.html $uri $uri/index.html $uri.html @ruby;
  }

  location @ruby {
    proxy_pass http://myapp;
  }
}

After switching back to use ip 127.0.0.1:3000 and 127.0.0.1:3001 inside upstream block, the server generated the errors:

2014/05/05 10:34:39 [error] 6158#0: *2 no live upstreams while connecting to upstream, client: 52.74.130.210, server: example.com, request: "GET /favicon.ico HTTP/1.1", upstream: "http://127.0.0.1:3001”, host: "24.15.27.113"

2014/05/05 10:34:39 [error] 6158#0: *2 no live upstreams while connecting to upstream, client: 52.74.130.210, server: example.com, request: "GET /favicon.ico HTTP/1.1", upstream: "http://127.0.0.1:3000/", host: "24.15.27.113"

2014/05/05 10:34:39 [error] 6158#0: *2 no live upstreams while connecting to upstream, client: 52.74.130.210, server: example.com, request: "GET /favicon.ico HTTP/1.1", upstream: "http://myapp/favicon.ico", host: "24.15.27.113"

Update 05/05/2014:
I ran the following command to check the connection:

telnet 127.0.0.1 3000 

and the result was:

Trying 127.0.0.1...
telnet: Unable to connect to remote host: Connection refused

I tried to restart the thin server, but got error messages.

thin restart -C /etc/thin/myapp.example.com -o 3000

Error:

/usr/local/rvm/gems/ruby-2.1.1/gems/thin-1.6.2/lib/thin/daemonizing.rb:129:in `send_signal': Can't stop process, no PID found in tmp/pids/thin.3000.pid (Thin::PidFileNotFound)
from /usr/local/rvm/gems/ruby-2.1.1/gems/thin-1.6.2/lib/thin/daemonizing.rb:111:in `kill'
from /usr/local/rvm/gems/ruby-2.1.1/gems/thin-1.6.2/lib/thin/controllers/controller.rb:94:in `block in stop'