Factory Girl / Capybara deleting records from database mid-test?

Working with RSpec & Capybara, I'm getting an interesting test failure mode which goes away with a few subtle rearrangements of lines in the test case...stuff that shouldn't matter.

I'm developing my own authentication system. It is currently working and I can login/out with the browser and the session works etc etc. However, trying to test this is failing. Something is going on that I don't quite understand, which seems to depend on the order of (seemingly) unrelated calls.

require 'spec_helper'

describe "Sessions" do
  it 'allows user to login' do
    #line one
    user = Factory(:user)
    #For SO, this method hashes the input password and saves the record
    user.password! '2468'

    #line two
    visit '/sessions/index'


    fill_in 'Email', :with => user.email
    fill_in 'Password', :with => '2468'
    click_button 'Sign in'

    page.should have_content('Logged in')
  end
end

As is, that test fails...the login fails. After inserting 'debugger' calls into both the spec and the controller I can see why: the user is not getting inserted into the database as far as the controller is concerned:

Edit adding in ApplicationController

class ApplicationController < ActionController::Base
  helper :all
  protect_from_forgery

  helper_method :user_signed_in?, :guest_user?, :current_user

  def user_signed_in?
    !(session[:user_id].nil? || current_user.new_record?)
  end

  def guest_user?
    current_user.new_record?
  end

  def current_user
    @current_user ||= session[:user_id].nil? ? User.new : User.find(session[:user_id])
  rescue ActiveRecord::RecordNotFound
    @current_user = User.new
    flash[:notice] = 'You\'ve been logged out.'
  end
end


class SessionsController < ApplicationController
  def login
    user = User.where(:email=>params[:user][:email]).first

    debugger ###

    if !user.nil? && user.valid_password?(params[:user][:pas