My fix (for Ubuntu 8.04 with postgres 8.3) was as follows, I know it
cannot be the "right" solution but after playing with locales for too
long (where did you change the locale?)
change /opt/openerp-server/bin/service/web_services.py
diff web_services.py.ORIG web_services.py
71c71,74
< cr.execute("""CREATE DATABASE "%s" ENCODING 'unicode' TEMPLATE
"template0" """ % name)
---
> cr.execute("""CREATE DATABASE "%s" ENCODING 'LATIN1' TEMPLATE
> "template0" """ % name)
--
"could not create database" on a new installation of ubuntu and postgresql 8.3
https://bugs.launchpad.net/bugs/331065
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