I didn't see any errors in my server log, but my guess is that the tempfile changes generate_simple_captcha_image
might be the problem?
Version 0.4.0 had the same problem. Changing the simple_captcha2 version to 0.3.2 "fixed" the issue.
irb(main):001:0> include SimpleCaptcha::ImageHelpers
=> Object
irb(main):002:0> generate_simple_captcha_image('asdf')
SimpleCaptcha::SimpleCaptchaData Load (1.4ms) SELECT `simple_captcha_data`.* FROM `simple_captcha_data` WHERE `simple_captcha_data`.`key` = 'asdf' ORDER BY `simple_captcha_data`.`id` ASC LIMIT 1
-background '#fff' -fill '#000' -size 100x28 -wave 1x86 -gravity Center -pointsize 22 -implode 0.2 label: -evaluate Uniform-noise 0 jpeg:-
StandardError: Error while running convert: convert: no images defined `jpeg:-' @ error/convert.c/ConvertImageCommand/3210.
from /usr/local/lib/ruby/gems/2.2.0/gems/simple_captcha2-0.3.4/lib/simple_captcha/utils.rb:17:in `run'
from /usr/local/lib/ruby/gems/2.2.0/gems/simple_captcha2-0.3.4/lib/simple_captcha/image.rb:83:in `generate_simple_captcha_image'
from (irb):2
from /usr/local/lib/ruby/gems/2.2.0/gems/railties-4.2.5.1/lib/rails/commands/console.rb:110:in `start'
from /usr/local/lib/ruby/gems/2.2.0/gems/railties-4.2.5.1/lib/rails/commands/console.rb:9:in `start'
from /usr/local/lib/ruby/gems/2.2.0/gems/railties-4.2.5.1/lib/rails/commands/commands_tasks.rb:68:in `console'
from /usr/local/lib/ruby/gems/2.2.0/gems/railties-4.2.5.1/lib/rails/commands/commands_tasks.rb:39:in `run_command!'
from /usr/local/lib/ruby/gems/2.2.0/gems/railties-4.2.5.1/lib/rails/commands.rb:17:in `<top (required)>'
from bin/rails:4:in `require'
from bin/rails:4:in `<main>'