Index files grow forever?

I have a table that records events, one per row.  There is
a timestamp column, and an index on that timestamp.  Every
so often a process checks the number of rows in the table,
and then deletes old events until the number of rows is below
some pre-set limit.

The size of the data file stays roughly constant over time
(a vacuum is performed after deletions), but the size of
the index file seems to grow forever!  Vacuum doesn't seem
to help, even when I type the command slowly and hit the 
keys very hard.

Has anyone seen this?  I know I can drop/recreate the index but
I'd rather understand what is going on first.

I am running PSQL V 7.0.3 on Linux.   Is this fixed in 7.1

Bonus question:  I'm also worried about the pg_log file.

-- cary

(I tried pgsql-bugs to no avail)