BUG #2167: Performance degradation

The following bug has been logged online:

Bug reference: 2167
Logged by: Sunil Basu
Email address: sunil(dot)basu(at)esspl(dot)com
PostgreSQL version: 8.0
Operating system: Windows XP
Description: Performance degradation
Details:

I am connecting to Postgresql from my Delphi application.
My Delphi application connects to 2 databases- 1. MS Access which is my
business database and 2. Postgresql where I store data matching some
specific criteria from the business database.

I explain my problem issue:

Previously I used to insert records into the postgresql database
unconditionally. That is everytime a data comes it is stored in the
postgresql. So I land up with some redundant data always.
But the operation was smooth and near about 600 records could be inserted
per second.

Now I have made a check in the postgresql database that whether a record
exists depending on criteria which is set as per the index order defined for
my postgre table. I used a sql "Select 1 from ... where ..." statement for
checking in the postgresql.
Depending on the record count from the select query, I decide whether to
insert or to update.
Now I have noticed a considerable degradation in performance. Now near about
60-75 records can be updated/inserted per second.

I need help on this.