Version details for psql/postmaster

hi,
I have postgres 8.3.4 installed on my test m/c.. I know that psql is a
commandline client support for postgres. When I do psql --version i have

psql --version
psql (PostgreSQL) 8.3.4
contains support for command-line editing

and when i do postmaster/postgres version which i know that is a server for
postgres it gives me:

postgres --version
postgres (PostgreSQL) 7.2.7

so my question is whether the Postgres 8.3.4 is the version for client or
server??
is the internal version for server the same as above or it also should be
8.3.4??

Got a bit confusd on this on... Instant help appreciated a lot!!

Thanks in ADVANCE!!