[speedgoose]

Yes you indeed have a licensing conflict. The GPLv3 is pretty explicit about it, you must release your software under the GPLv3 license if you use GPLv3 software.

Good news if you use your ruby gem in non GPLv3 software, pHash can provide a commercial license as well : http://phash.org/licensing/

You could perhaps have a dual licensing model for phashion too. One GPLv3 and one other requiring a commercial license of pHash.

After updating phashion to the correct license, I think you also have to communicate to the users of your library. Telling them that their software must be licensed under the GPLv3, or that they need to get another license from pHash and you, or removing your library from your project. Some users are most likely not aware of the GPLv3 license of pHash as it is a dependency of a dependency, and not from rubygems.