> Try removing and re-installing the postgresql-devel package
>
> yum remove postgresql-devel
> yum install postgresql-devel
>

 Ok, I just did that, but I am having a problem that my gem command is
not working all of a sudden.
I had also tried to debug the extconf.rb, I had stepped inside a
function that appeared to hang so I killed the process.

gem --help
/usr/lib/ruby/site_ruby/1.8/rubygems.rb:521:in `expand_path': No such
file or directory - getcwd (Errno::ENOENT)
        from /usr/lib/ruby/site_ruby/1.8/rubygems.rb:521:in `find_files'
        from /usr/lib/ruby/site_ruby/1.8/rubygems.rb:520:in `map'
        from /usr/lib/ruby/site_ruby/1.8/rubygems.rb:520:in `find_files'
        from /usr/lib/ruby/site_ruby/1.8/rubygems.rb:1132
        from /usr/bin/gem:8:in `require'
        from /usr/bin/gem:8

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