Comment 6 for bug 391119

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Martin Pitt (pitti) wrote : Re: package postgresql-8.3 8.3.7-0ubuntu8.04.1 failed to install/upgrade: could not create log file

As I said, it seems that you or something wedged the permissions of /var/log/postgresql/. You can fix it locally with

  sudo chgrp postgres /var/log/postgresql/

in a Terminal window.