Large transaction problem

I'm trying to move data from an Oracle database into postgresql 7.4.3.
I have a program that is extracting data and writing it to an sql script
as a long series of inserts (20,000 at a time). When I run these
scripts using psql, I occassionally get a problem that is reported as

ERROR: canceling query due to user request

And then it won't clear. If I quit psql and start it again, every sql
statement on that database gives this error after 30 seconds (approx) of
hanging. The only way to clear this is to restart the postgresql
backend and then try vacuuming a couple of times. It eventually clears
in this manner.

What am I doing wrong? I increased the WAL segments from 3 to 30 but
this did not get rid of the problem. Is there a limit on the size of a
transaction?

Thanks.

Paul