I updated s3config.rb to use 
"#{ENV['HOME']}/.s3config.yml"
 instead of 
's3config.yml
.
But then you might want to take this a step further and 
- move all *.rb files into ~/lib/ruby/1.8/s3sync 
 - while putting s3{sync,cmd}.rb into ~/bin.  
 - Then you need to update each of the libraries to have require s3sync/LIBRARYNAME.  
 - Finally, set this environment variable in your login scripts, RUBYLIB=~/lib/ruby/1.8.