Thanks for your help with pg_resetxlog. It recovered all of our databases, and it looks like we got lucky in that no updates were lost.
We are deciding on the goals for our next release, and one of the issues on the table is an upgrade to postgres 8. Can you comment on the improvements in performance and especially reliability over postgres 7.4? In particular, if the risk of pg_xlog corruption is lower, that would support the move to postgres 8 in a particularly effective way, while the pain of the recent episode is still vivid.