A picture rail is a moulding near the top of a wall that is used to nail hardware for hanging pictures. This is usually a solution in spaces where holes cannot be put into the walls. Choosing paint colours for walls with a picture rail depends on how you would like to highlight or alter proportions of the space.
Paint the picture rail and the ceiling the same light colour to give the appearance of a higher ceiling. This is true especially if the picture rail is set lower than the typical placement, which is where the wall and the ceiling meet.
For the appearance of lower ceilings, paint the ceiling a darker colour than the colours of the picture rail and the walls. The higher the contrast of dark ceiling to light walls, the lower the ceiling will seem.
Paint picture rails with a glossier finish than the walls, ceiling and floor. This reflects light in the room.
For picture rails serving only a functional use, rather than as an architectural element of the space, paint the rails the same colour of the walls. This blends the picture rail into the wall rather than contrasting it as a feature.