Steve Lorek has written a nice overview of Service Objects: What They Are, and When to Use Them.
"There has been a lot of discussion within the Ruby community around the service objects pattern. The term "service objects" may be unfamiliar to even seasoned Rails developers, because Rails itself implements the Model-View-Controller design pattern. There is no concept of a 'service' in a new Rails application. So it's understandable that this concept may seem foreign, and indeed non-obvious. However, I believe that the service objects pattern is well worth considering for any non-trivial Rails application."
It's a quick read, and gives a very good introduction/overview to when and why to use service objects in Rails.
Further to the above. If you have a Railscasts-pro account, you can watch this video on Service Objects.
It starts with an example of modularising out the functionality of a FAT model, using concerns. He then describes why he doesn't prefer that approach (my first introduction to the brilliant phrase "grep-driven-development") and finishes up with an alternative using service objects instead.
It's Rails-3 oriented - so you know you don't have to do anything special to include the concerns directory anymore... but otherwise his examples are still quite relevant and a great intro to the practicalities of how to actually go about a simple service-object and/or modularisation refactor.