proper tuning for restoring from pg_dump in 8.3.7

I am restoring a fairly sizable database from a pg_dump file (COPY FROM
STDIN style of data) -- the pg_dump file is ~40G.

My system has 4 cores, and 12G of RAM. I drop, then recreate the
database, and I do this restore via a: cat dumpfile | psql db_name. The
trouble is that my system free memory (according to top) goes to about
60M, which causes all operations on the server to grind to a halt, and
this 40G restore will take a couple hours to complete.

I noted that the restore file doesn't do anything inappropriate such as
creating indices BEFORE adding the data or anything - thus I can only
suspect that my trouble has to do with performance tuning ineptitude in
postgresql.conf.

My settings (ones that I have changed):
shared_buffers = 512MB
temp_buffers = 512MB
work_mem = 256MB
maintenance_work_mem = 64MB
max_fsm_pages = 655360
vacuum_cost_page_hit = 3

Any insight would be most appreciated.

r.b.

Robert W. Burgholzer
Surface Water Modeler
Office of Water Supply and Planning
Virginia Department of Environmental Quality
rwburgholzer(at)deq(dot)virginia(dot)gov
804-698-4405
Open Source Modeling Tools:
http://sourceforge.net/projects/npsource/