Essentially you want a join model that joins users to users. But you'll have to use more descriptive terms for Rails.
Twitter doesn't use Rails, but here's how their user associations might work in Rails using Twitter's terminology. Note: Twitter doesn't require bidirectional following (ie just because a user follows another, doesn't mean that second user follows the first)
class User < ActiveRecord::Base
has_many :followings
has_many :followers, :through => :followings, :class_name => "User"
has_many :followees, :through => :followings, :class_name => "User"
end
class Following < ActiveRecord::Base
# fields: follower_id followee_id (person being followed)
belongs_to :follower, :class_name => "User"
belongs_to :followee, :class_name => "User"
end
Forced bidirectional friendship (like Facebook enforces that I cannot be friends with you, unless you are a friends with me) will take a little more work. You will either need to manage reciprocal entries with callbacks, or use custom finder SQL. Using custom finder SQL means that ActiveRecord probably won't be able to manage associations for you.