temporary tables, indexes, and query plans

I have an app which imports a lot of data into a temporary table, does
a number of updates, creates some indexes, and then does a bunch more
updates and deletes, and then eventually inserts some of the columns
from the transformed table into a permanent table.

Things were not progressing in a performant manner - specifically,
after creating an index on a column (INTEGER) that is unique, I
expected statements like this to use an index scan:

update foo set colA = 'some value' where indexed_colB = 'some other value'

but according to the auto_explain module (yay!) the query plan
(always) results in a sequential scan, despite only 1 row getting the
update.

In summary, the order goes like this:

BEGIN;
CREATE TEMPORARY TABLE foo ...;
copy into foo ....
UPDATE foo .... -- 4 or 5 times, updating perhaps 1/3 of the table all told
CREATE INDEX ... -- twice - one index each for two columns
ANALYZE foo; -- didn't seem to help
UPDATE foo SET ... WHERE indexed_column_B = 'some value'; -- seq scan?
Out of 10 million rows only one is updated!
...

What might be going on here?

--
Jon