Cannot create init file pg_internal.ini - postmaster won't start

Hello,

When I do (as postgres):
bash$ psql mydb

I get:
Connection to database 'mydb' failed.
FATAL 1: cannot create init file pg_internal.init

I'm not out of disk space. What's wrong? Where is it trying to create these
files? Is it a permissions issue? Is it a libraries problem? Mine are in:
/usr/local/pgsql/lib but they're also linked from:
/url/lib/pgsql cause that seemed to fix alot of things.
I'm using 7.0beta2 and starting postmaster *was* working with the version
previously.

Thanks,
Phil