Work Around:

1) Enter the relevant directory (use> locate server.key)
2) Back up old server.key link.
3) Copy ssl-cert-snakeoil.key to server.key 
4-5) Change its owner & group to postgres
6) Ensure the permissions are 700 or 740 (as requested by error message)

Recipe for my Ubuntu 8.04 w/ postgresql-8.3 (beware of typos):

1) sudo cd /var/lib/postgresql/8.3/main/
2) sudo mv server.key                                             server.key-0
3) sudo cp /etc/ssl/private/ssl-cert-snakeoil.key      server.key 
4) sudo chown postgres                                          server.key
5) sudo chgrp postgres                                           server.key 
6) sudo chmod 740                                                 server.key 
7) sudo /etc/init.d/postgres-8.3 start 

I will let you reverse engineer the bug. 
Good luck.
Don V Black

-- 
package postgresql-8.4 8.4.2-1~intrepid1 failed to install/upgrade: subprocess 
post-installation script returned error exit status 1
https://bugs.launchpad.net/bugs/511039
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