The IF EXISTS grammar clause in
DROP DATABASE [IF EXISTS] "#{name}"
was introduced in Postgresql 8.2.

Using IF EXISTS in 8.1 or prior is an SQL error.
8.1 is still in major use, it is the primary Postgresql version on 
Debian Etch for example.

The backwards compatible fix would seem to be to go back to the way it 
was done in Rails 2.0.2 using the dropdb and createdb commandline 
commands.
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