i want to implement a templating system with use of liquid files, any best practice suggestions... all are welcome..
Have a look at liquid template rendering by mephisto blogging application. You can also view working of CMS such as Radiant which too uses liquid templates.
For non liquid templating system, you can try theme_support_plugin. There has been hacks for this to be able to work with Rails 2. For liquid, you can check out more info here: http://www.artweb-design.de/2008/2/5/sexy-theme-templating-with-haml-safemode-finally