undefined method (NoMethodError) ruby

This is because you are calling method choices, before defining it. Write the code as below:

puts "Select [1] [2] [3] or [q] to quit"
users_choice = gets.chomp 

def choices (choice)    
  while choice != 'q'      
    case choice
    when '1' 
      break  puts "you chose one!"
    when '2'   
      break puts "you chose two!"
    when '3'
      break  puts "you chose three!"
    end     
  end 
end

choices(users_choice)

I used break, to exit from the while loop. Otherwise it will create an infinite loop.